The stock market experienced a sharp downturn on Thursday, erasing earlier gains and raising new concerns for investors. Initially, positive news from Nvidia's strong earnings report and a jobs report indicating an unexpected rise in unemployment seemed to point towards a potential Federal Reserve interest rate cut in December.
Traders reacted with optimism, driving major stock indexes higher. However, this positive sentiment quickly reversed as investors re-evaluated the implications of the economic data.
They realized that Nvidia's exceptional performance might not be sustainable, leading to fears of an artificial intelligence bubble. Furthermore, a closer look at the jobs report suggested the economy might be stronger than initially perceived, making a Fed rate cut less likely.
By the end of Thursday, the market had fallen significantly, with the Dow Jones experiencing a large swing and the S&P 500 and Nasdaq also declining. Nvidia shares closed down after earlier gains, and Bitcoin experienced a sharp drop.
This downward trend continued into Friday, with futures indicating further losses and market volatility expected to persist as investors await clearer answers on the AI market and the Federal Reserve's monetary policy.
