Stocks Reverse Sharply Lower as Tech Stocks Get Crushed

Economic Indicators - US September average hourly earnings remained unchanged from August at +3.8% year-over-year, stronger than expectations of +3.7% [1] - US September nonfarm payrolls rose by +119,000, beating expectations of +51,000, indicating a stronger labor market [1] - US October existing home sales rose by +1.2% month-over-month to an 8-month high of 4.10 million, exceeding expectations of 4.08 million [7] Labor Market Insights - US weekly initial unemployment claims fell by -8,000 to 220,000, better than expectations of 227,000, suggesting a stronger labor market [2] - However, weekly continuing claims rose to 1.974 million, the highest in four years, indicating challenges for the unemployed in securing new jobs [2] Stock Market Movements - Stock indexes initially rallied after Nvidia's strong revenue forecast, which alleviated valuation concerns in the AI sector [4] - However, US stock indexes later sold off sharply, with the S&P 500 hitting a 2.25-month low and the Dow Jones posting a 5-week low [5] - Nvidia reported Q3 revenue of $57.01 billion, above the consensus of $55.19 billion, but still closed down more than -3% [16] Federal Reserve Outlook - Hawkish comments from Fed officials indicated concerns about inflation and the risks of lowering interest rates, dampening expectations for further rate cuts [8] - The probability of a rate cut at the December FOMC meeting increased to 35% from 25% [3][11] Corporate Earnings - Q3 earnings for S&P 500 companies rose by +14.6%, significantly exceeding expectations of +7.2% year-over-year, with 82% of companies reporting better-than-expected results [12] - Bath & Body Works reported Q3 net sales of $1.59 billion, below the consensus of $1.63 billion, leading to a more than -24% drop in stock price [19] - Jacobs Solutions reported Q3 revenue of $3.15 billion, slightly below the consensus of $3.16 billion, resulting in a more than -10% decline in stock price [20] Sector Performance - Semiconductor and AI-infrastructure stocks experienced significant sell-offs, with Micron Technology down more than -10% [17] - Cryptocurrency-exposed stocks also retreated, with Galaxy Digital Holdings down more than -9% following a drop in Bitcoin prices [18]