Market Volatility: Investors Weigh Economic Data and Nvidia’s AI Ambitions
The US stock market experienced a rollercoaster ride on Tuesday, as investors digested new economic data and Nvidia’s (NVDA) bold plans for artificial intelligence. The S&P 500 (^GSPC) ultimately fell around 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) lost roughly 1.1%. The Dow Jones Industrial Average (^DJI) managed to eke out a 0.2% gain.
Economic Data Raises Inflation Concerns
The Institute for Supply Management’s manufacturing PMI indicated that the manufacturing sector continued to expand in December, but the prices paid index surged to a nearly two-year high of 64.4. This spike has raised concerns about inflation, as it suggests that prices may remain elevated until mid-2023. Capital Economics North America economist Thomas Ryan noted that this data serves as a reminder that the Fed’s fight against inflation is far from over.
Job Openings Rise, But Hiring Slows
The Job Openings and Labor Turnover Survey (JOLTS) revealed that job openings increased more than expected in November, reaching 8.1 million. However, the number of hires decreased compared to the previous month, and the quits rate fell to 1.9%. This mixed data has set the stage for Friday’s crucial December jobs report.
Fed Watch: Interest Rate Cuts Delayed
In light of the recent economic data, investors are now betting that the Federal Reserve will keep interest rates unchanged later this month. According to the CME FedWatch tool, there is almost no chance of a rate cut. This shift in sentiment has pushed the 10-year Treasury yield (^TNX) higher, adding roughly 7 basis points to hover just below 4.7%.
Nvidia’s AI Ambitions
Nvidia shares initially soared after CEO Jensen Huang’s CES keynote, which unveiled a new AI superchip and other planned products. However, the stock ultimately fell around 5% as investors digested the news. Despite this, other chip stocks continued their rally, with Micron Technology (MU) up about 4%.
Tariff Uncertainty Lingers
The watch is on for more clarity around Donald Trump’s tariff agenda, which could have significant implications for global growth. The president-elect has denied reports that his team is considering more targeted measures, but uncertainty remains.
Services Sector Sees Price Surge
Data from the Institute of Supply Chain Management showed that prices paid in the services sector jumped to a reading of 64.4 in December, up from 58.2 the month prior. This surge has raised concerns about the path forward for inflation.
Leave a Reply