After the bell on Wednesday, Nvidia released its highly anticipated earnings report in which the chipmaker delivered record revenues in the third quarter. The stock initially gained on Thursday however it later reversed course to end lower, with its solid results still not enough to shake off doubts around spending on artificial intelligence (AI) infrastructure. Thursday saw the release of the delayed September jobs report, which proved mixed; while non-farm payrolls came in higher-than-expected the unemployment rate rose to 4.4%, its highest level in four years.
For the week the tech-heavy Nasdaq Composite declined by 2.7%, the S&P 500 fell 2.0% and the Dow Jones Industrial Average was down 1.9%. This was despite Friday’s rally, spurred on by dovish comments from New York Fed President Williams. Earlier in the week, minutes from the Federal Reserve’s October policy meeting signalled diverging views amongst policymakers, but Williams indicated that the central bank could still cut interest rates in the near-term, significantly boosting market expectations for a December rate cut. Treasury yields moved lower, with the 10-year note closing at 4.06%.
European stocks also logged a weekly decline, dragged down by the elevated tech valuation concerns. The pan-European STOXX 600 was down 2.2% for the week, its steepest decline since late July. Tech stocks were particularly lower, but defence stocks also experienced weakness towards the end of the week on possible signs of a peace plan between Russia and Ukraine. Regional indices also notched declines, with Germany’s DAX losing 3.3%, having hit a six-month low. Data for the region was reasonably positive, with the composite purchasing managers’ index coming in slightly ahead of expectations and remaining in expansionary territory for November, driven by the services sector which offset the manufacturing sector sliding into contraction.
The Asia Pacific region also experienced sharp falls for the week. In Japan, the Nikkei 225 fell 3.5% whereas the broader Topix index lost 1.9%, with AI names amongst the biggest laggards. An economic stimulus package worth around ¥21.3tn was approved by the government, raising concerns around stretching the country’s finances. The Japanese yen had fallen to a 10-month low against the US dollar, prompting some officials to step up their commentary around the possibility of intervening to deal with the currency’s decline. Hong Kong’s Hang Seng index was the steepest decliner of the week, losing 5.1%, again dampened by the AI-sentiment.