Journalism of Courage
Relief is running through Wall Street on Thursday, and the US stock market is rallying toward one of its best days since the summer after it seemed to pass a couple of crucial tests.
The Dow Jones Industrial Average was up 675 points, or 1.5%, as of 10:25 a.m. Eastern time, and the Nasdaq composite was 2.3% higher.
The market had been shaky for weeks coming into Thursday, largely because of twin worries: Stocks caught up in the frenzy around artificial-intelligence technology may have simply shot too high, and the Fed may be done delivering the cuts to interest rates that Wall Street loves.
But Nvidia helped quiet worries about a potential bubble for AI stocks after it reported another big profit for the summer that topped analysts’ expectations, while also giving a forecast for coming revenue that easily cleared analysts’ estimates. By delivering big profits and indicating more are coming, Nvidia and other stocks can justify their stocks’ price gains and make them look less expensive.
Nvidia rose 3.9% to claw back some of its losses for the month, which briefly exceeded 10%. Because it’s the biggest company in the US market by value, Nvidia’s stocks has more effect on the S&P 500 than any other company’s.
And given the forecasts that Nvidia gave late Wednesday, “it is very hard to see how this stock does not keep moving higher from here,” according to analysts at UBS led by Timothy Arcuri. They also said “the AI infrastructure tide is still rising so fast that all boats will be lifted.”
Nvidia’s chips are powering the move into AI, which is feeding into growth for a range of other companies, and AI-linked businesses were toward the front of the market. Palantir Technologies rose 3.3%, and Broadcom gained 4.8%, for example.
For the second worry that’s been dogging Wall Street, Thursday’s jobs report from the US government also offered some relief.
Financial markets seemed to pick the data apart for encouraging signals, according to Seema Shah, chief global strategist at Principal Asset Management. It showed that hiring by US employers was stronger in September than economists expected, which may suggest the economy remains solid. But it also said the unemployment rate worsened slightly, which could give the Fed reason to cut its main interest rate at its next meeting in December.
Traders still see a December rate cut as relatively unlikely, giving it a roughly 44% probability, but that’s better than the 30% chance they saw a day earlier, according to data from CME Group.
What the Fed does is critical for the stock market because prices ran to records in part because of expectations for continued cuts to rates.
Lower rates can give a boost to the economy and to prices for investments, but they can also worsen inflation, which has stubbornly remained above the Fed’s 2% target.
Elsewhere on Wall Street, Walmart rallied 5.5% after the retailer delivered another standout quarter. It reported strong sales and profits that blew past Wall Street expectations as it continues to lure cash-strapped Americans who have grown increasingly anxious about the economy and prices.
With other retailers dialing back projections, the nation’s largest retailer raised its financial outlook Thursday after its strong third quarter, setting itself up for a strong holiday shopping season.
In the bond market, the yield on the 10-year Treasury eased to 4.11% from 4.13% late Wednesday.
In stock markets abroad, indexes rallied across much of Europe and Asia.
Japan’s Nikkei 225 jumped 2.6%, and South Korea’s Kospi rose 1.9% for two of the bigger gains.
