Wall Street stocks end mixed amid Fed rate cut worries and anticipation for Nvidia earnings
Wall Street stocks ended mixed on Friday as investors looked ahead to Nvidia’s quarterly results and worried that the Federal Reserve may hold off on cutting U.S. interest rates in December.
The U.S. market, however, outperformed Asia and Europe. While safe-haven gold prices fell, the dollar index edged up after blue-chip bourses from Tokyo to Paris had closed lower. In London, fresh concern about Britain's upcoming budget had added to pain across UK markets.
Investors in recent days have fretted about the pace of rate cuts and pricey valuations of heavyweight artificial intelligence stocks that have fueled much of the U.S. stock market's gains in recent years.
Nvidia and the AI Trade
Turbulence in technology stocks could ratchet higher in the coming week as investors react to the quarterly report from Nvidia, the world's largest company by market value. Nvidia is the "epicenter" of the build-out of AI, so its results after the bell on Wednesday will be important to the tech sector as well as areas such as industrials and utilities.
Analysts warn that if the market doesn't see the expected growth or positive commentary from Nvidia going forward, the AI trade could see a significant dent. Nvidia shares have soared about 1,000% since the launch of ChatGPT in November 2022, and the stock carries an 8% weight in the S&P 500 and a roughly 10% weight in the Nasdaq 100.
Fed Concerns and Market Sentiment
U.S. markets partly recovered after a selloff early in the session that dragged all three major Wall Street indexes down more than 1%.
Kansas City Fed President Jeffrey Schmid signaled concerns about "too hot" inflation, indicating he could dissent again at the December meeting should policymakers cut rates. This contributed to pessimism, with the probability of a December cut falling sharply.
Strategists offered mixed views: some remain bullish, seeing negative sentiment as a contrarian "Buy signal" with strong forecasted Earnings Per Share (EPS). Others noted the market has "froth" and that the current volatility reflects "air coming out of the balloon." Analysts stressed the need for investors to look past short-term noise and focus on the longer-term economic and monetary narrative.
