Sometimes even knocking it out of the park isn’t enough. Nvidia delivered blockbuster earnings and a brief stock rally, but the subsequent sharp turnaround suggests investors have fundamentally changed their
perspective on artificial-intelligence spending amid uncertainty about the economy.
Nvidia’s stellar string of results has been the motor of the AI rally. But Thursday’s selloff—the sharpest intraday swing since tariffs-driven volatility in April—is an indicator that the market is no longer paying attention to the chip maker for where stocks go next. No matter how good its hardware is, the market isn’t convinced of the returns for its customers.
That doesn’t mean the entire AI trade is doomed. But stocks exposed to concerns about excessive debt loads are under the microscope—especially those with close links to ChatGPT-developer OpenAI, such as Oracle and SoftBank. Credit markets are entering a late-stage cycle with a 36% likelihood of recession by late 2026, driven by weak corporate profits, higher interest expenses, and rising nonperforming loans, according to UBS strategists. For indications about appetite for risky stocks, it
might be better to look at Bitcoin and its crypto peers, where a 30% fall from recent highs is hurting traders who were using leverage to boost returns.
Is there anything that could change the pessimistic mood? A Federal Reserve rate cut in December is the biggest hope, but September’s mixed jobs report, which revealed more positions added than expected but also a rising unemployment rate, did little to clear things up. The chances of a reduction at the next Fed monetary policy meeting are priced at about 41% according to the CME FedWatch tool, which isn’t much of a comfort.
Nvidia has led the AI rally admirably but the stock market is looking for more names to step up to the plate. Otherwise there could be more painful
days ahead.
—Adam Clark
***What’s Ahead for Markets in 2026? From “Liberation Day” tariffs to torrid rallies in AI stocks and gold, this year has been full of surprises. Join us on Dec. 11 at noon for discussions with investment strategists and money
managers about the outlook for the economy and markets in 2026—and how to position your portfolio for success. Sign up here.
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Short-Lived Enthusiasm After Nvidia Earnings. AI Fears Are Back.
Enthusiasm over Nvidia’s earnings report and what its forecast suggested about the artificial intelligence trade was short-lived, dragging down tech stocks and Bitcoin, which continued its slide early Friday to
its lowest level since April. Concerns about an AI bubble returned with a vengeance.
- Bitcoin, a proxy for risk, fell 3.8% to around $83,112 Friday morning, on track for its lowest 4 p.m. price since April 10, according to Dow Jones Market Data. The tech-heavy Nasdaq shed 2.2% on Thursday after starting out positive.
Bitcoin is possibly the culprit, said Interactive Brokers’ chief strategist Steve Sosnick.
- “It’s become such a proxy for speculation that I can’t be the only person using it as a signal,” Sosnick wrote. Bitcoin was down 35% from its Oct. 6 record high above $126,000. It’s in a correction, defined as a fall of 20% or more from a recent high.
- Mizuho’s Daniel O’Regan told Barron’s that the near-term narrative around AI is still somewhat mixed, a challenge in changing the minds of retail investors. Sosnick suggested that trading algorithms may be acting on a relationship between stocks and Bitcoin.
- At the same time the stock market’s fear gauge spiked to its highest levels in a month. The Cboe Volatility Index, or VIX, surged as high as 28.27, its highest intraday level since Oct. 17, according to Dow Jones Market Data. It later pulled back to 26.05. That’s a signal of heightened market volatility.
What’s Next: Investors aren’t just worried about the tech sector’s massive AI spending. There are doubts about another interest-rate cut in December, with futures markets giving a 60% probability of rates holding steady, according to the CME’s FedWatch tool.
—Anita Hamilton, Connor
Smith, and Liz Moyer
Delayed September Jobs Report Doesn’t Make Fed’s Path Clearer
Doubts about a Fed rate cut next month were
also flamed by the release of much-delayed September jobs data. It was a mixed picture, with surprisingly strong numbers for jobs added but a slight uptick in the unemployment rate that further complicates the central bank’s decision.
- Employers added a surprisingly robust 119,000 jobs to payrolls in September, more than double the 50,000 that economists forecast. But the unemployment rate ticked up to 4.4% from 4.3%. The agency’s revision for August payrolls into an outright decline offset some of the optimism.
- On balance, the report showed that although job demand has clearly continued to be weak, the U.S. labor market isn’t in imminent danger of collapsing. In addition, officials will have an incomplete picture of the economy: No government jobs data for October or November before the Fed’s Dec. 9-10 meeting.
- While Thursday’s report is dated—coming more than six weeks later than initially planned, thanks to the government shutdown—ClearBridge Investments’ Jeff Schulze writes it’s an “important bread crumb” that will factor into the Fed’s assessment of labor conditions.
- There
are anecdotal signs of labor market cuts, however. Verizon is cutting 13,000 workers, the most in its history. CEO Daniel Schulman told staff Thursday that the cuts had begun across the organization as it seeks to “significantly reduce” outside labor costs like outsourced jobs.
What’s Next: The tick
higher in the unemployment rate wasn’t a complete surprise. The Chicago Fed, using a blend of private and public data sources, estimated it was 4.35% in September, or 4.4% on a rounded basis. It has also estimated October’s unemployment rate would be 4.4%.
—
