The market is one stock now
Add Axios as your preferred source to
see more of our stories on Google.
Nvidia's powerhouse earnings weren't quite enough to pause a tech-driven selloff on Thursday. Instead, it took comments from a top Federal Reserve apparently confirming an interest rate cut in December to support the market, at least in Friday morning trading.
Why it matters: So much of the market, and the economy, has relied on a single company, and its earnings didn't do enough to dispel AI bubble concerns.
What they're saying: "It's a one-bet market and that to me is risky," Marta Norton, chief investment strategist at Empower, tells Axios.
By the numbers: On Thursday: the market opened up 1.4% but still closed lower, an extremely rare reversal that has happened only twice before in the last five years:
- April 2020, following a rebound amid the Covid crash.
- April 2025, following the "Liberation Day" tariff selloff.
State of play: Stocks had a bounce back Friday morning after John Williams, president of the New York Fed, said that there was a case for another cut in interest rates "in the near term."
- The S&P 500 was modestly higher in early trading Fiday.
- But shares of Nvidia were down about 3%.
- Norton notes that the market is primarily focused on the AI trade, and Nvidia specifically, rather than what's next for the Federal Reserve.
Zoom in: Strong Nvidia earnings acted as a "capstone" confirming "the demand is there," but "there were so many of these other questions that were raised that caused a selloff that were not answered" by the results, Norton says.
- A wave of high-profile warnings from the likes of Michael Burry along with concerns about stretched valuations and circular funding are all headwinds that are still present even though Nvidia had positive results, she says.
Thought bubble: I'm watching what retail does amid this selloff, as multiple sources told me if those stocks freak and sell, it could worsen the drawdown.
Reality check: There's no free lunch on Wall Street, Mark Malek of Siebert Financial warned in a note to clients this week.
- You may not be worthy of Nvidia's over 40% gains for the year if you can't stomach its down days, according to his view.
The bottom line: Wall Street is narrowly focused on AI bubble fears for now.
- "We remain cautiously optimistic that U.S. equities will rally into year-end led by (year-to-date) winners as investors keep it close-to-the-vest," Stuart Kaiser, head of U.S. equity trading strategy at Citi, wrote in a note to clients prompted by Thursday's selloff.
