Wall Street indexes end lower after sharp reversal, tech leads decline

By Caroline Valetkevitch

Wall Street stocks slid on Thursday in a sharp reversal from an early rally, as technology gains faded after a boost from Nvidia's earnings and U.S. jobs data muddied the labor market outlook.

Shares of Nvidia NVDA ended lower after surging as much as 5% earlier in the day. Most chip-related companies also were negative, with an index of semiconductors SOX also down.

Both the Nasdaq and Dow swung more than 1,000 points from their highs of the day to their lows, with the Nasdaq ending down more than 2% after being up 2.6% at its intraday high. Wall Street's fear gauge, the Cboe Volatility index VIX, jumped.

Investors have worried about lofty technology valuations amid concerns over steep artificial intelligence spending, with the Nasdaq now sharply off its October high.

In addition, data showed the U.S. unemployment rate rose in September even as employers added more jobs than economists had expected. Traders now see an increasing chance of a Federal Reserve interest rate cut in December.

"I expected the market to be up today just based on the strength of Nvidia's earnings and the recent skepticism about AI investment. Nvidia's earnings obviously dispelled a bunch of those fears," said Jed Ellerbroek, portfolio manager at Argent Capital Management in St. Louis.

While it is difficult to pinpoint a cause for the market's reversal, he said "we've been in kind of a defensive type of trading action for the last two weeks, so it could be a continuation of that."

The consumer staples sector S5CONS was the S&P 500's only gainer, while technology S5INFT was down the most.

According to preliminary data, the S&P 500 SPX lost 103.07 points, or 1.52%, to end at 6,539.09 points, while the Nasdaq Composite IXIC lost 479.64 points, or 2.16%, to 22,084.59. The Dow Jones Industrial Average DJI fell 381.52 points, or 0.83%, to 45,757.25.

Nvidia, the world's most valuable company, forecast sales above analysts' estimates for the fourth quarter and surpassed expectations for third-quarter revenue.

In addition, Nvidia CEO Jensen Huang shrugged off concerns about AI on a call with analysts, saying, "We see something very different."

Among gainers, Walmart WMT advanced after the retailer raised its annual forecast for the second time this year and set a December date to change its stock listing to the Nasdaq from the NYSE.