Nvidia and Tesla Stocks Plunge Amid Intensifying Tech Selloff

Nvidia and Tesla stocks experienced significant declines as a tech stock selloff in the market gained momentum. Nvidia shares were down over 3%, while Tesla’s fell approximately 4%. This downturn follows a particularly challenging day for major market indexes, which saw their worst performance in a month.

Market Overview

The Dow Jones Industrial Average decreased by more than 530 points, or 1.1%. The S&P 500 dropped 1%, and the tech-heavy Nasdaq fell by about 1.2%. Other semiconductor companies also faced losses alongside Nvidia; AMD shares declined over 4%, and Micron Technology stock fell roughly 1%.

Market Context

This week, the Dow briefly surpassed 48,000 for the first time. However, stocks quickly retreated as investors grappled with renewed anxieties following the end of the longest federal government shutdown in U.S. history. This shutdown has created uncertainty surrounding the Federal Reserve’s potential pause in interest rate cuts and raised concerns about inflated valuations in AI stocks.

Investor Sentiment

Carol Schleif of BMO Private Wealth commented on the situation, noting that while many missed data points during the shutdown would remain unavailable, it is uncertain what the inflation and jobs data will indicate once the reports resume. She anticipates potential volatility in the market in the upcoming weeks.

Federal Reserve Projections

Jim Reid from Deutsche Bank emphasized that the week has been marked by fluctuating investor sentiment. There is a blend of relief from the shutdown ending and apprehension regarding AI stock valuations and future Federal Reserve rate cuts. The odds of a 25-basis-point cut in December now stand around 54%, an increase from 50% the day prior but a decrease from 70% a week ago.

Labor Market Outlook

• During the shutdown, the government’s data collection was halted, leading to reliance on private-sector labor trackers.
• These trackers indicated job losses in sectors such as government and retail.
• Announced layoffs have surged due to cost-cutting measures and the increasing influence of AI.

With the government now back in operation, there is uncertainty regarding how the absence of data will impact labor market trends going forward.