The day Wall Street’s AI party turned into a panic
For a few electric hours on Thursday, it looked as if Wall Street had found its hero in Nvidia . The chipmaker’s latest earnings landed before the opening bell and, right on cue, futures jumped, traders cheered and the big screens on trading floors glowed green. The Dow Jones Industrial Average roared hundreds of points higher, the S&P 500 and Nasdaq Composite followed, and the AI trade looked unstoppable again. By lunchtime, though, the mood had flipped from euphoria to unease – and by the close, into something closer to fear.
When good news isn’t good enough
Nvidia’s numbers were not just good; they were exceptional, with revenue surging and demand for AI chips still running hot. “These results steady the ship for the AI trade into year‑end,” Jefferies analysts said, capturing the early sense that one strong quarter might silence bubble talk, at least for a while. In pre‑market trading, Nvidia’s shares climbed as much as 5%, dragging other chip names and mega‑cap tech stocks higher with it.
But as the cash session wore on, the story bent in a different direction. The Nasdaq Composite, up more than 2% at one stage, ended the day down about 2.2%, while the S&P 500 dropped 1.6% and the Dow finished roughly 0.8% lower, in one of the sharpest intraday reversals this year. Nvidia itself gave up its early gains and slipped into the red by the close, a visible symbol of how quickly confidence can drain from a crowded trade.
That wobble landed in a market already on edge. A mixed US jobs report showed stronger‑than‑expected hiring but a higher unemployment rate, muddying the picture for the Federal Reserve’s next rate move. With the odds of a December rate cut still below 50%, each data point now acts like a vote either for or against the “soft landing” story investors have been telling themselves all year.
Is this what an AI bubble feels like?
The speed of Thursday’s swing – a Dow that travelled more than a thousand points from peak to trough – sharpened an uncomfortable question: has the AI boom gone too far, too fast? Ray Dalio put it bluntly, warning that “there’s definitely a bubble in markets” and stressing that bubbles rarely burst because one company stumbles, but because investors as a herd decide they want cash more than lofty promises. That line resonated as screens turned red into the close.
Others tried to draw a finer distinction. Strategists at Goldman Sachs argued recently that while tech companies may be flirting with over‑investment, their profits and balance sheets still look far stronger than in classic bubble episodes. As one strategist told CNBC, AI leaders have become “sentiment anchors” – when they rally, the whole market breathes easier, and when they reverse, everything wobbles. Thursday was a live demonstration of that dynamic.
Away from AI, the tape told a more nuanced story. Walmart rallied strongly after raising its outlook, hinting that the US consumer is still willing to spend into the holiday season. Yet even that bright spot could not offset the selling in high‑growth names and the chill spreading through risk assets, with Bitcoin sliding to multi‑month lows.
So the day ended not with a crash, but with a question mark. Nvidia had done its part; the numbers justified the hype, at least for now. The market’s reaction, however, suggested something deeper: a recognition that when so much of Wall Street’s future is pinned to a single, shimmering theme, even great news can feel like not quite enough.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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For a few electric hours on Thursday, it looked as if Wall Street had found its hero in Nvidia . The chipmaker’s latest earnings landed before the opening bell and, right on cue, futures jumped, traders cheered and the big screens on trading floors glowed green. The Dow Jones Industrial Average roared hundreds of points higher, the S&P 500 and Nasdaq Composite followed, and the AI trade looked unstoppable again. By lunchtime, though, the mood had flipped from euphoria to unease – and by the close, into something closer to fear.
When good news isn’t good enough
Nvidia’s numbers were not just good; they were exceptional, with revenue surging and demand for AI chips still running hot. “These results steady the ship for the AI trade into year‑end,” Jefferies analysts said, capturing the early sense that one strong quarter might silence bubble talk, at least for a while. In pre‑market trading, Nvidia’s shares climbed as much as 5%, dragging other chip names and mega‑cap tech stocks higher with it.
But as the cash session wore on, the story bent in a different direction. The Nasdaq Composite, up more than 2% at one stage, ended the day down about 2.2%, while the S&P 500 dropped 1.6% and the Dow finished roughly 0.8% lower, in one of the sharpest intraday reversals this year. Nvidia itself gave up its early gains and slipped into the red by the close, a visible symbol of how quickly confidence can drain from a crowded trade.
That wobble landed in a market already on edge. A mixed US jobs report showed stronger‑than‑expected hiring but a higher unemployment rate, muddying the picture for the Federal Reserve’s next rate move. With the odds of a December rate cut still below 50%, each data point now acts like a vote either for or against the “soft landing” story investors have been telling themselves all year.
Is this what an AI bubble feels like?
The speed of Thursday’s swing – a Dow that travelled more than a thousand points from peak to trough – sharpened an uncomfortable question: has the AI boom gone too far, too fast? Ray Dalio put it bluntly, warning that “there’s definitely a bubble in markets” and stressing that bubbles rarely burst because one company stumbles, but because investors as a herd decide they want cash more than lofty promises. That line resonated as screens turned red into the close.
Others tried to draw a finer distinction. Strategists at Goldman Sachs argued recently that while tech companies may be flirting with over‑investment, their profits and balance sheets still look far stronger than in classic bubble episodes. As one strategist told CNBC, AI leaders have become “sentiment anchors” – when they rally, the whole market breathes easier, and when they reverse, everything wobbles. Thursday was a live demonstration of that dynamic.
Away from AI, the tape told a more nuanced story. Walmart rallied strongly after raising its outlook, hinting that the US consumer is still willing to spend into the holiday season. Yet even that bright spot could not offset the selling in high‑growth names and the chill spreading through risk assets, with Bitcoin sliding to multi‑month lows.
So the day ended not with a crash, but with a question mark. Nvidia had done its part; the numbers justified the hype, at least for now. The market’s reaction, however, suggested something deeper: a recognition that when so much of Wall Street’s future is pinned to a single, shimmering theme, even great news can feel like not quite enough.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
Ready to earn on every trade?
Invest in 11,000+ US stocks & ETFs