From AI enthusiasm to bubble anxiety in one day

U.S. stocks on Thursday saw their wildest mood swings in months.

of Nasdaq Composite Shares rose as much as 2.6% in the morning US time, before closing down 2.16%. We also saw wild swings from high to low (unfortunately, not in the opposite direction). S&P500reached a high of 1.9% before ending the day down 1.56%. of Dow Jones Industrial AverageFollowing the same arc, the stock ended down 0.84% ​​after rising 1.56% during the day.

Nvidia led the commotion. Shares in the AI ​​chip darling rose as much as 5%, but fell sharply from that peak to close down 3.2%. If we roughly plot the movements of other AI stocks, oracle and AMDis following a similar path, suggesting that while NVIDIA CEO Jensen Huang’s rejection of the AI ​​bubble narrative initially reassured investors, their concerns were not quelled for long.

The US employment statistics for September also heightened market tension. The very late release of the statistics meant that today’s economic situation could be very different from what it was two months ago, but the numbers were much better than expected. That further weakened expectations for a rate cut, with traders increasingly betting that U.S. Federal Reserve officials will keep interest rates unchanged in December, according to the CME FedWatch tool.

Investors now face a battle with soaring valuations and one less rate cut. Although there is still an optimistic mood on the calendar, the cheering schedule appears to be less generous than expected.

AI stocks fell again, and US stocks also fell. U.S. trading was choppy on Thursday, with major indexes closing in the red, while Bitcoin fell to its lowest since April. AI stocks such as ASML and BESI rose, with Europe’s Stoxx 600 index rising 0.4%.

Key takeaways from Nvidia’s earnings. CEO Jensen Huang dismissed the idea of ​​an “AI bubble,” while CFO Colette Kress affirmed the company’s “$5 trillion” revenue forecast and said orders from China during the quarter were “minor.”

The United States added 119,000 jobs in September. This is significantly higher than the Dow Jones consensus estimate of $50,000. The unemployment rate rose to 4.4% from 4.3% in August, the highest level in about four years.

Ray Dalio advises holding on even during a bubble. The Bridgewater founder told CNBC on Thursday that “the picture is very clear” that we are in a bubble. However, nothing jumps out yet and investors should still hold their positions.

(PRO) ‘A storm is brewing’ in UK investment trusts. Activist investor Boaz Weinstein believes there is an opportunity due to the valuation discrepancy and has unveiled two strategies for this area.

Nvidia had a tough quarter. But analysts warn that the real risk of an AI bubble lies elsewhere.

Nvidia’s revenue is widely seen as a key measure of the health of the AI ​​industry, but some analysts caution that the company’s performance doesn’t tell the whole story.

Analysts interviewed by CNBC drew a line between AI chip companies such as Nvidia and downstream companies such as hyperscalers and companies that build AI models. “The concern is that companies are raising a lot of debt to build data centers,” said Gil Luria, head of technology research at DA Davidson.

— Dylan Butts