The rally was short-lived: US indices lost their gains and sharply went into negative territory
Nvidia's report and positive jobs statistics were not enough for the market
The rally in the U.S. stock market, caused by the impressive report of Nvidia on November 19, came to an abrupt end: the main U.S. stock indices replaced the growth of 1-2% in early trading with a decline. Nvidia shares, which were up 5% in trading on November 20, were losing 2% at the time of publication of this text. They pulled the market as a whole.
The S&P 500 broad market index was down 1% at the moment, the Nasdaq Composite technology index was down 1.5%, and the Dow Jones Industrial Average blue-chip index, which also includes Nvidia, was down 0.8%. The former was up 1.6% at the open, the latter 2% and the latter 1%.
What's the reason
The main reason for the sharp change in market direction was the decreased probability of rate cuts at the Fed's meeting in December, according to CNBC. The employment report for September, postponed because of the shutdown, showed that the economy created 119,000 jobs - more than expected. Some traders believe the strong labor market gives the Fed even less reason to refrain from further policy easing. After the release of the data, Fed Funds rate futures estimated the chance that the central bank would cut rates for the third time this year at less than 40%, the channel said.
"The Nvidia effect is being dampened by the reduced likelihood of a December rate cut," Jeff Kilburg of KKM Financial told CNBC. - Markets were counting on an easing in December, but that scenario seems to be fading now."
Peter Cardillo, senior market economist at Spartan Capital Securities, is concerned about the increase in unemployment to 4.4%, which was also reflected in the September statistics. "Consumer spending is not very strong ahead of the holiday season and given the increasing layoffs," he said in a MarketWatch statement.
More volatility lies ahead for the markets, but in the long term, the technology sector will return to rally, according to David Russell, global head of market strategy at TradeStation, as quoted by MarketWatch. "I think the [tech] sector has some bearish short-term momentum right now. It needs to consolidate, and people will be watching for that. But from my perspective, the overall upward trend will resume. There's nothing to derail it," Russell explained.
This article was AI-translated and verified by a human editor
