Blockbuster numbers from Nvidia sent traders into a morning sugar rush from Tokyo to New York, only for indexes to nosedive in the worst intraday reversal since April’s tariff tantrum. The wobble stretched a grim spell for the companies riding the AI wave as investors fretted about swollen valuations and the mountain of cash being shovelled into data centres and silicon.
A delayed US jobs report, held up by the government shutdown, offered little clarity on the labour market or the long-argued December rate cut. Traders liked the glimpse of daylight for a hot minute as the Nasdaq jumped 2.6 per cent before tech shares slumped, dragging it down 2.2 per cent.
Nvidia rose five per cent at one stage, then finished three per cent lower. Bitcoin slid to its lowest level since April, and the cocaine-nose jobs of Wall Street twitched as the volatility index climbed by about 12 per cent.
Chief Investment Officer at Wilmington Trust Investment Advisors, Tony Roth said: “What stands out to me is the lack of any substantial shift in narrative to cause such a big shift... there’s just not a lot of confidence in the market right now"
Nvidia chief Jensen Huang arrived with good news about the company, yet the market still flinched. The postponed September jobs report showed the US added 119,000 posts, beating forecasts, while unemployment nudged up to 4.4 per cent. Investors grumbled that the figures were old and contradictory, leaving them clueless about what a divided Federal Reserve might do next month.
The selloff intensified even though Nvidia reported a 62 per cent jump in sales of AI data-centre chips and lifted guidance. Traders have grown tetchy about big tech splashing fortunes on AI infrastructure with no promise of a quick payback. Credit markets are sniffing trouble as giants lean on complex debt deals to fund the build-out. Protection costs on Oracle bonds have soared nearly 50 per cent since mid-October.
Other AI-linked stocks took a hammering. Micron fell 11 per cent, sinking 18 per cent on the week. Western Digital dropped 8.9 per cent. AMD retreated 7.8 per cent.
Chief investment officer at Schwab Asset Management, Omar Aguilar, said: “Nvidia is a leader in the market, but the AI ecosystem is beyond Nvidia. The credit market seems to be providing a barometer that there may be risks on the horizon."
The risk-off mood spread to industrial firms and bitcoin, which hit $86,337, more than 30 per cent below its early October peak.