Today’s Outlook:
• US MARKET : At the closing of NYSE, Dow Jones Industrial Average fell 386 points, or 0.8%, the S&P 500 index fell 1.6% NASDAQ Composite slipped 2.2%. The S&P 500 slumped Thursday, after giving up gains as the rally in Nvidia faded on fresh concerns that AI stock valuations are running too hot at a time when hopes for a December rate continue to ease.
Nvidia gave up gains to close 3% lower despite blowout numbers as fears about overstretched valuations resurfaced. Bridgewater founder Ray Dalio added to these fears, warning of a bubble forming in AI, though cautioned against selling. Nvidia was sharply higher earlier in the day as investors cheered the artificial intelligence major reporting stronger-than-expected earnings and guidance for the third quarter. The company flagged stellar demand for its cutting-edge chips, and also pushed back against concerns over an AI valuation bubble in its post-earnings call. CEO Jensen Huang said Nvidia was seeing “something very different” in that AI-driven demand for its chips was set to broaden beyond just data centers and hyperscalers. He also dismissed criticisms of circular investment by the company, stating that Nvidia’s investment in OpenAI was intended to “expand our ecosystem and support their growth.” The stellar quarterly print from Nvidia, which acts as a bellwether for AI demand, has boosted sentiment across the tech sector, which has been hit hard in recent sessions.
The U.S. economy added more jobs than anticipated in September, according to data released earlier Thursday, but a fall in the numbers of payrolls in August and a rise in the overall unemployment rate pointed to ongoing weakness in the U.S. labor market. Nonfarm payrolls rose 119,000 in September, above the 50,000 expected, but the August figure saw a revised drop of 4,000, while the unemployment rate rose to 4.4%, a four-year high, up from the 4.3% level seen the prior month. The data aren’t likely to convince hawkish fed members to back a rate cut in December just as recent Fed speak continued to showing a growing number of concerns stalling inflation. “At least in the near term, given the already rising level of trepidation regarding a December rate cut, while far from robust, this morning’s positive showing in job creation should solidly the Fed’s position on the sidelines through at least year-end,” Stifel said in a note. Chicago Fed President Austin Goolsbee on Thursday pointed to stalling inflation, adding to doubts about a December rate cut.
• EUROPEAN MARKET : Despite pulling back from earlier highs, European stocks closed higher on Thursday, after strong results from tech giant Nvidia helped soothe concerns over AI-inspired heightened valuations. The DAX index in Germany climbed 0.6%, the CAC 40 in France gained 0.3% and the FTSE 100 in the U.K. rose 0.2%. Investors are also digesting more quarterly earnings in Europe, with BNP Paribas stock surging after the French lender lifted its capital ambitions, with the higher target reflecting stronger underlying profitability.
German producer prices fell less than expected in October, decreasing by 1.8% on the year, data showed earlier Thursday, instead of the expected 1.9% decline.
• ASIAN MARKET : Most Asian stocks rose sharply on Thursday with technology shares rebounding after stronger-than-expected earnings and positive commentary from Nvidia helped quell some concerns over a bubble in the sector. Hong Kong shares lagged as local tech names clocked mixed gains, while Xiaomi continued to fall after it warned of higher global smartphone prices due to rising chip costs.
Japan’s Nikkei 225 index rallied 2.7%, while South Korea’s KOSPI surged 1.9% as tech stocks ascended sharply on Nvidia’s earnings. The world’s most valuable listed company clocked stronger-than-expected quarter earnings, while its guidance for the current quarter also beat estimates on what it described as outsized AI-fueled demand. Mainland China stocks lagged on having a relatively smaller tech weightage. The Shanghai Composite indexes fell 0.4%.
• COMMODITIES : Oil prices fell on Thursday as the administration of U.S. President Donald Trump pushed for Ukraine’s acceptance of a peace agreement with Russia to end a war that has gone on for more than three years. Brent crude futures settled at USD 63.38 a barrel, down 13 cents, or 0.2%. U.S. West Texas Intermediate crude futures finished at USD 59.14 a barrel, down 30 cents, or 0.5%. Both benchmarks rose earlier in Thursday’s session on a larger-than-expected draw on U.S. crude supplies, reported on Wednesday by the U.S. Energy Information Administration.
• INDONESIA : The JCI closed slightly higher, rising 0.16% to 8,419.92. The index continues to test support at the 8,400 level. A failure to hold this area could open room for consolidation within the 8,200–8,400 range. The JCI also touched a new alltime high at 8,491.43 during the first session yesterday.
Given the negative global catalysts and today being the final trading day of the week, investors are advised to closely monitor positions using respective trailing stops while keeping an eye on key index levels and reactions.
Rotation to Old-Dividend Players & Back to Consumer: We continue to recommend partially shifting allocation toward stocks offering dividend yields above government bonds, alongside defensive consumer goods names to balance portfolios and take advantage of their attractive yield-to-valuation levels.
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