Wall Street’s major indexes fell on Thursday as the initial optimism from Nvidia’s earnings faded. Investors became more cautious about high valuations across the technology sector, while fresh labor data added uncertainty to the outlook for future U.S. interest rate cuts.
Nvidia shares were last down 1% after rising as much as 5% earlier in the session. Most chipmakers also turned negative. The Philadelphia Semiconductor Index slipped 2.1%.
The company had forecast stronger-than-expected sales for the final quarter of the year and posted revenue that topped estimates for the third quarter. Still, analysts warned the stock’s pace may be difficult to sustain. Dan Coatsworth of AJ Bell noted that even with Nvidia’s strong profits and cash flow, several warning signs remain.
CEO Jensen Huang dismissed concerns about AI demand during an analyst call, saying the company sees “something very different” ahead.
The broader rally in technology stocks, driven largely by AI enthusiasm over the past year, has begun to cool. Investors are increasingly wary of a potential AI bubble. Questions around long-term monetization, rising debt issuance, and heavy spending within the sector have weighed on sentiment. The Nasdaq remains well below its October highs, and Nvidia has fallen nearly 9% from its peak.
Robert Pavlik of Dakota Wealth said heavy spending on AI infrastructure remains a concern, even if semiconductor sales remain strong.
By 12:11 p.m. ET, the Dow Jones Industrial Average had fallen 143.02 points, or 0.30%, to 46,000.74. The S&P 500 dropped 30.57 points, or 0.46%, to 6,611.59. The Nasdaq Composite declined 147.42 points, or 0.64%, to 22,419.92.
Large-cap tech and growth stocks also lost momentum. Amazon slipped 0.8%. The information technology sector was down 1% after early gains, while consumer staples led the market.
Walmart jumped 6% after raising its annual outlook for the second time this year. The company also confirmed it will move its stock listing from the NYSE to the Nasdaq in December.
Meanwhile, new data showed U.S. job growth accelerated in September, while the unemployment rate rose to 4.4%, signaling continued softness in the labor market. Traders now largely expect the Federal Reserve to skip a rate cut in December, though the jobs data caused a slight shift in expectations.
Thursday’s release was the final jobs report before the Fed’s December meeting. The U.S. Bureau of Labor Statistics will not publish an October payroll report and instead plans to release combined October-November data next month.
Palo Alto Networks fell 6.3% after announcing a $3.35 billion deal to acquire cloud-monitoring company Chronosphere.
Decliners outpaced advancers on both major exchanges. On the NYSE, losers beat gainers by a 1.35-to-1 ratio, while the Nasdaq saw a 1.2-to-1 ratio. The S&P 500 recorded 12 new 52-week highs and 10 new lows. The Nasdaq posted 67 new highs and 172 new lows.
