U.S. stocks ended sharply lower on Thursday after a market rally fueled by robust earnings from NVIDIA came to an abrupt halt as investors worried that the Federal Reserve may not go for another interest rate cut in December. All three major indexes ended in negative territory.
The Dow Jones Industrial Average (DJI) declined 0.8% or 386.51 points, to close at 45,752.26 points. The blue-chip index was up more than 700 points at session highs before giving up all its gains.
The S&P 500 slid 1.6%, or 103.40 points, to finish at 6,538.76 points. Tech, energy, communication services, industrials, materials and consumer discretionary stocks were the worst performers.
The Technology Select Sector SPDR (XLK) declined 3.2%, while the Industrials Select Sector SPDR (XLI) gave up 1.7%. The Consumer Discretionary Select Sector SPDR (XLY) and Materials Select Sector SPDR (XLB) each lost 1.5%. The Communication Services Select Sector SPDR (XLC) and the Energy Select Sector SPDR (XLE) each lost 1.1%. Ten of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq fell 2.2%, or 486.18 points, to end at 22,078.05 points and record its lowest close since Sept. 11.
The fear gauge, CBOE Volatility Index (VIX), was up 11.67% to 26.42. Decliners outnumbered advancers on the NYSE by a 3.25-to-1 ratio. On the Nasdaq, a 3.07-to-1 ratio favored declining issues. A total of 21.45 billion shares were traded on Thursday, higher than the last 20-session average of 19.94 billion.
On the Nasdaq, there were 1,168 new highs and 3,585 new lows. On the NYSE, there were 93 new highs and 269 new lows.
Wall Street opened on a high on Thursday, buoyed by robust earnings from AI chip darling NVIDIA Corporation (NVDA), which reported its quarterly results on Wednesday after the bell. Tech stocks, especially those focused on AI, led the rally after NVIDIA gave an upbeat fourth-quarter sales forecast.
However, the euphoria was short-lived as stocks retreated, with shares of NVIDIA ending 3.2% lower. Even NVIDIA CEO Jensen Huang’s assurance that the AI isn’t a bubble, which has been worrying investors lately, failed to regain their confidence.
Concerns have been growing over the sky-high valuation of AI stocks, which have been weighing on the tech sector and the broader market. The fears returned again on Thursday, leading investors to dump riskier assets.
Other major AI players also declined on Thursday, with shares of Oracle Corporation (ORCL) declining 6.6%, while Microsoft Corporation (MSFT) lost 1.6%. Oracle has a Zacks Rank #3 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
