Dow Jones Falls as Mixed Jobs Data Overshadows Nvidia Earnings
The Dow Jones Industrial Average (DJIA) experienced fluctuations recently, as mixed labor market data overshadowed strong earnings from Nvidia (NVDA). Initially, the index surged by 1.5% following Nvidia’s impressive quarterly results. However, it gradually lost these gains as investors reacted to the September jobs report.
Job Market Data Overview
The Bureau of Labor Statistics (BLS) reported an increase of 119,000 nonfarm payrolls in September. This figure was significantly higher than the consensus estimate of 50,000. Despite this positive news, August’s data was revised downward from a previously reported gain of 22,000 to a loss of 4,000. Additionally, the unemployment rate rose by 0.1% to 4.4%, marking the highest level since October 2021.
Economic Implications
Heather Long, Chief Economist at Navy Federal Credit Union, highlighted the labor market’s stagnation by noting that the economy has added an average of only 44,000 jobs per month over the past four months. This tepid growth has contributed to the rising unemployment rate. The BLS also noted that the upcoming October payrolls and November jobs report will be released on December 16, partly due to delays caused by a government shutdown.
Market Reaction and Federal Reserve Outlook
Following the jobs report, the likelihood of a rate cut during the Federal Open Market Committee (FOMC) meeting on December 9-10 increased to 39.6%, up from 30.1% the previous day. Reduced economic demand could prompt the Federal Reserve to lower interest rates to stimulate growth.
Fed Governor Lisa Cook expressed concerns about “outsized asset price declines” due to high valuations across equities, bonds, and housing markets. However, she indicated that any price drops are not expected to threaten the broader financial system.
Stock Market Performance
As of the latest reports, the Dow Jones is down by 0.69%. Nvidia’s stock has declined, reverting to negative territory after its earnings boost. This downturn has raised concerns among investors about an AI bubble. In contrast, Walmart (WMT) emerged as a strong performer, with third-quarter revenue reported at $179.5 billion, exceeding analyst expectations of $177.43 billion. The company’s adjusted earnings per share of 62 cents also surpassed the anticipated 60 cents.
Industrials and Other Stocks
- Boeing (BA) leads losses in the industrials sector, down approximately 18% over the past month.
- Amazon (AMZN) is also reflecting declines leading up to the Black Friday shopping season, which starts on November 28.
DIA ETF Tracking Dow Jones Movement
The SPDR Dow Jones Industrial Average ETF (DIA) is structured to replicate the Dow Jones’s performance. As such, DIA shares are also experiencing a downturn. Analysts have projected an average price target of $532.74 over the next three months for DIA, indicating a potential upside of about 15.99% from current levels. The ETF holds 31 stocks with 29 buy ratings, two hold ratings, and no sell ratings.
