As concerns persist that artificial intelligence (AI) stocks are excessively overvalued, New York stocks reversed sharply intraday and closed lower. Nvidia, regarded as the leading AI bellwether, briefly sparked risk appetite with strong earnings, but it only supported a short-lived rally.
On the 20th (local time) at the New York Stock Exchange, the Dow Jones Industrial Average finished at 45,752.26, down 386.51 points, or 0.84%, from the previous session. The Standard & Poor's (S&P) 500 fell 103.40 points, or 1.56%, to 6,538.76, and the tech-heavy Nasdaq composite dropped 486.18 points, or 2.15%, to 22,078.05, respectively.
New York stocks opened higher, a move attributed to Nvidia's earnings report released the previous day stating that third-quarter revenue surged 62% from a year earlier.
Chief Executive Officer Jensen Huang said in a statement released with the results, "Blackwell sales are off the charts, and cloud GPUs are sold out."
However, the rally did not last long. As buying momentum weakened during the morning session, gains were erased, and around noon the S&P 500 reversed lower into negative territory. The intraday drop from the Nasdaq composite's high to its low reached 5%.
Nvidia ultimately fell 3.15% on the day, with an intraday decline of as much as 8% from its peak. Semiconductor maker Micron dropped 10.87%.
▲ AMD (-7.84%) ▲ Palantir (-5.85%) ▲ Intel (-4.24%) ▲ Qualcomm (-3.93%) and other semiconductor names plunged across the board.
On top of that, the September jobs report did not revive expectations for a December rate cut by the U.S. Federal Reserve (Fed), offering little help in preventing the market's turn to weakness.
Thomas Martin, senior portfolio manager at Globalt Investments, said, "There are still many questions about inflation, employment, Fed policy, and tariffs."