Up and Down. It was another wild day on Wall Street.
It seemed for a few hours like tech weakness would overtake markets, but stocks rallied to erase losses in time for the closing bell. All it took were some reassurances from the godfather of AI, Nvidia CEO Jensen Huang.
The Nasdaq Composite rose 0.1%, marking the tech index's largest intraday rebound since April. The S&P 500 saw a bounce back of its own, climbing 0.3%. It was the index's biggest reversal in over three months. The Dow Jones Industrial Average, which started and ended the session in the green, rallied a whopping 1.1%, or 556 points.
Despite strength on the index level, AI stocks aren't out of the woods yet. The iShares Semiconductor ETF fell for the eighth straight day. Tech stocks also dominated the S&P 500 list of the day's top laggards, including Hewlett Packard Enterprise, Dell Technologies, and Everpure.
It was the non-tech trade that held up the market on Thursday. In fact, most sectors ended the day higher. Health care, materials, financials and consumer discretionary sectors gained more than 1%. The Dow is more heavily exposed to these segments in comparison to other indexes, which explains why it gained more than its peers.
The big takeaway for investors is that despite all the ups and downs, today's market moves signal the rotation out of AI is gathering steam.
The bond market did its part to help boost indexes on Thursday when yields continued to fall. The 10-year yield and the 30-day year yields saw the largest one-day declines since 2025, settling at 5.1% and 5.4%, respectively. Suddenly, the idea of 10-year yields going back to 5% isn't out of question. Now the challenge will be how long those yields can continue to fall.
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The Hot Stock: Equifax +7.3% The Biggest Loser: Hewlett Packard Enterprise -7.1%
Best Sector: Health Care +1.8% Worst Sector: Energy -1.6%
Don't Count Out AI Just Yet
Tech stocks have had a tough go of it recently.
Between yields near multi-year highs, oil prices holding high, and inflation running hot, investors have their pick of reasons to justify a challenging run for stocks.
But the days of the AI trade leading the bull market are far from over, and strong results from big tech companies this earnings season could be just what the market needs to squash its current worries.
"Investors are just a little skittish. They don't want to stick their neck out of earnings and so you have a little bit of a vortex until these big tech companies report over the next couple of weeks," says Chris Senyek, Wolfe Research's chief investment strategist.
Ross Mayfield, an investment strategist at Baird, sees earnings as an opportunity for corporate tech leadership to address mounting investor worries. "That is a useful mental reset for investors and for the market," he says.
Strong earnings from AI hyperscalers in particular have the potential to "remind investors why they liked [the AI] trade in the first place," says Jeff Blazek, the multi-asset co-CIO at Neuberger.
Meta will kick off hyperscaler earnings after the closing bell on Oct. 21. Microsoft and Alphabet will report on Oct. 28, with Amazon expected to release results the same week.
The Calendar
Alcoa, Bank of New York Mellon, Charles Schwab, Interactive Brokers Group, J.B. Hunt Transport Services, Marsh & McLennan, PNC Financial Services Group, Prologis, Taiwan Semiconductor Manufacturing, and U.S. Bancorp announce quarterly results tomorrow.
The Census Bureau reports retail sales data for September. Economists forecast a 0.3% month-over-month gain, after a 1.1% jump in August. Excluding autos and gas, sales are seen rising 0.2%.
The BLS releases the producer price index for September. The consensus call is for a 5.3% year-over-year jump, while the core PPI is expected to rise 4.4%. This compares with increases of 5.4% and 4.6%, respectively, in August.
-- Dan Lam
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