Bulls retreat: Walmart, Nvidia, jobs report fail to juice faith in stocks
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Market bulls, briefly roused Thursday morning, have slipped back into a fall hibernation.
Why it matters: The world's largest retailer, world's most valuable company and world's largest economy all showed signs of life — but not enough to shift the mood of increasingly jittery investors.
Catch up quick: Walmart raised its full-year outlook Thursday morning after another strong quarter, powered by double-digit e-commerce growth, Axios' Kelly Tyko reports.
- Nvidia raised its outlook based on what CEO Jensen Huang called "off the charts" demand for its Blackwell chips, which are used to power new AI systems.
- And the U.S. economy added 119,000 jobs in September, the Bureau of Labor Statistics said on Thursday in a release delayed by the record-long government shutdown. That means the labor market was in better shape than previously thought, Axios' Courtenay Brown reports.
All of that seemed just what investors needed to reverse a week-long stock slump driven by worries over consumer health, the sustainability of the AI boom and job losses.
- The S&P 500 jumped nearly 2% Thursday morning, the Dow rose over 700 points, and the tech-heavy Nasdaq soared 2.6%.
Yes, but: The good vibes proved short lived — all three indexes reversed sharply over the afternoon, closing deep in the red.
Zoom in: While Nvidia's Huang dismissed fears of an AI bubble on the company's earnings call Wednesday, investors by Thursday afternoon were back to questioning the massive valuations being given to stocks in the space.
- And in a "good news is sometimes bad news" situation — the stronger-than-expected jobs data is dimming hopes for near-term rate cuts, a key component for sustaining risk-on investments like frothy tech stocks and crypto.
- Expectations for a cut at the Fed's December meeting stayed below 40% on Thursday, per CME data — down from nearly 99% a month ago.
- The market's even assigning roughly 30% odds that rates stay unchanged at the Fed's next meeting in late January meeting, a scenario it gave a 0% chance just 30 days ago.
What we're watching: The consumer isn't in perfect health, and the job market isn't rock solid.
- "As pocket books have been stretched, you're seeing more consumer dollars go to necessities versus discretionary items," Walmart CFO John Rainey said Thursday morning on an earnings call.
- In the job market, Verizon confirmed Thursday that it's cutting more than 13,000 workers.
The bottom line: Despite surging interest in AI, consumer spending still represents 70% of the U.S. economy, according to Bespoke Investment Group, "so as much as the market focuses on AI and earnings from Nvidia, from an economic perspective, consumer activity represents a much more significant" factor.
