The U.S. stock market experienced extreme volatility on Friday, initially plummeting before recovering, largely driven by a dramatic turnaround from AI giant Nvidia. Concerns over high stock valuations and the Federal Reserve's interest rate decisions continue to create uncertainty.
The U.S. stock market saw a tumultuous start to Friday, with the S&P 500 initially dropping 1.3% before recovering to a 0.2% gain by late morning. The Nasdaq composite also flipped to a 0.5% gain, while the Dow Jones Industrial Average trimmed its nearly 600-point loss to 215 points. AI stocks, particularly Nvidia, were central to the action; Nvidia initially fell 3.4% but then surged to a 1.4% rise, pulling the market with it. Critics warn that the market, especially AI stocks like Nvidia which have seen massive gains, appears overvalued. Despite recent swings, the S&P 500 remains just 2% below its late-month record. Upcoming earnings reports, especially Nvidia's, are critical, as its performance significantly impacts the broader market due to its valuation briefly topping $5 trillion. Lower interest rates could make stocks appear less expensive, but uncertainty surrounds a potential third Fed rate cut in December due to persistent inflation and delayed economic data. Outside of tech, Walmart slipped 1.3% following the surprise announcement of CEO Doug McMillon's January retirement. In other markets, Bitcoin briefly fell below $95,000 before recovering to $97,000, while gold prices sank 2.2%. International stock markets in Europe and Asia also experienced significant drops.
