U.S. Stocks Show Substantial Downturn As Early Buying Interest Evaporates

(RTTNews) - After moving sharply higher early in the session, stocks showed a substantial downturn over the course of the trading day on Thursday. The major averages pulled back well off their early highs and tumbled firmly into negative territory.

The major averages ended the day just off their lows of the session. The Nasdaq plummeted 486.18 points or 2.2 percent to 22,078.05, the S&P 500 plunged 103.40 points or 1.6 percent to 6,538.76 and the Dow slumped 386.51 points or 0.8 percent to 45,752.26,

Early in the session, the tech-heavy Nasdaq had surged by as much as 2.6 percent, while the S&P 500 and the Dow had jumped by as much as 1.9 percent and 1.6 percent, respectively.

With the stunning reversal, the Nasdaq and the S&P 500 dropped to their lowest closing levels in over two months and the Dow fell to a new one-month low.

The early rally on Wall Street came amid a positive reaction to highly anticipated earnings news from market leader and AI darling Nvidia (NVDA).

Shares of Nvidia spiked by as much as 5.1 percent but pulled back sharply before closing down by 3.0 percent despite reporting better than expected third quarter results and providing upbeat guidance.

The subsequent downturn by the broader markets may have reflected concerns about the outlook for interest rates following the release of the Labor Department's long-delayed report on employment in the month of September.

While the report showed an unexpected uptick by the unemployment rate, job growth in September far exceeded economist estimates.

The Labor Department said non-farm payroll employment jumped by 119,000 jobs in September after a revised dip of 4,000 jobs in August.

Economists had expected employment to rise by 50,000 jobs compared to the addition of 22,000 jobs originally reported for the previous month.

At the same time, the report said the unemployment rate crept up to 4.4 percent in September from 4.3 percent in August. The unemployment rate was expected to remain unchanged.

The mixed data may have further eroded confidence that the Federal Reserve will lower interest rates by another quarter point in December.

While CME Group's FedWatch Tool indicates the chances of a rate cut next month have risen to 39.8 percent from 30.1 percent on Wednesday, that figure is down sharply from 98.8 percent a month ago.

Sector News

Computer hardware stocks extended the sharp pullback seen over the past several sessions, dragging the NYSE Arca Computer Hardware Index down by 8.8 percent to its lowest closing level in over a month.

Substantial weakness was also visible among gold stocks, as reflected by the 5.4 percent nosedive by the NYSE Arca Gold Bugs Index. The sell-off by gold stocks came amid a decrease by the price of the precious metal.

Semiconductor stocks also showed a stunning downturn over the course of the trading day, with the Philadelphia Semiconductor Index plunging by 4.8 percent after surging by as much as 3.2 percent.

Networking, oil service and brokerage stocks also came under considerable selling pressure, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged by 2.7 percent and South Korea's Kospi jumped by 1.9 percent, although China's Shanghai Composite Index bucked the uptrend and fell by 0.4 percent.

Most European stocks also moved to the upside on the day but closed well off their best levels. While the German DAX Index climbed by 0.5 percent, the French CAC 40 Index rose by 0.3 percent and the U.K.'s FTSE 100 Index crept up by 0.2 percent.

In the bond market, treasuries have moved higher in reaction to the unexpected uptick by the unemployment rate. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 2.7 basis points to 4.106 percent.