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| Technical bounce helps Wall Street recover, but interest rate and AI worries still loom |
The three major indexes all rose, with the S&P 500 up about 1%, the Dow Jones up 1.1% (493 points) and the Nasdaq Composite also recording an increase of nearly 0.9%. However, if looking at the overall week, this is still the second consecutive week of decline for the market, reflecting its sensitivity and vulnerability to a series of unstable factors.
Volatility has been a staple of Wall Street in recent days, and Friday was no exception, with the indexes swinging all morning before finding strong momentum late in the session. The performance capped a week in which the S&P 500 fell just 4.2% from its record high, but also forced investors to endure some of the sharpest hourly swings since the April sell-off.
These shocking moves are testing the patience of investors, after months of a relatively smooth bull market. They raise two core questions that, so far, have not been clearly answered: Have the prices of "stars" like Nvidia and Bitcoin risen too high and become bubbles? And, more importantly, will the Federal Reserve (Fed) actually implement the expected interest rate cuts, which are seen as a tonic for the economy and markets?
On the second question, markets seemed to find some reassurance in a speech by John Williams, president of the Federal Reserve Bank of New York. Markets jumped after he told a conference in Chile that he saw “room for further adjustment” in interest rates, a comment that was interpreted as a signal that he could support another rate cut in December.
However, the policy picture is not simple. While the market is hopeful, there are still dissenting voices from other Fed officials, due to concerns about inflation remaining high. This sharp disagreement has created an environment of uncertainty, causing the market to swing back and forth violently.
That volatility peaked on Thursday, when the market initially surged on optimism from Nvidia’s impressive earnings, which helped ease concerns about a bubble in artificial intelligence (AI). But the rally was quickly extinguished by a sharp selloff, the biggest one-day reversal since April, after former President Donald Trump shocked the market with “Liberation Day” tariffs.
Despite strong earnings reports from Nvidia, the company that powers the AI revolution, doubts remain. Will all the AI chips that giants like Amazon and Meta Platforms are pouring money into actually deliver the expected returns and productivity? If not, many investors fear that these massive investments will be worthless.
AI stocks continued to be at the center of Friday’s volatility. Nvidia, after initially rising, fell 4.3% and then fluctuated back and forth before closing down 1%. Amazon followed a similar path, swinging from red to green to finish up 1.6%. Bitcoin was no exception, briefly falling below $81,000 before recovering to $85,000.
Notably, most stocks on Wall Street rose despite the big tech losses. Nearly 90% of the S&P 500 stocks rose, reflecting widespread optimism. “When the biggest companies are taking the brunt of the losses, the market can look weaker than it really is,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Several retailers led the gains. Gap jumped 8.2% after reporting better-than-expected earnings, while Ross Stores also rose 8.4%. Homebuilders such as DR Horton (+6.8%), Lennar (+5.9%) and PulteGroup (+5.2%) also surged on hopes that lower interest rates will boost the housing market.
In the bond market, the yield on the benchmark 10-year Treasury note fell to 4.06% from 4.10% late Thursday. The move came as traders increased bets on a December rate cut by the Fed, with CME Group estimating the probability at 72%, up from 39% just a day earlier.
Analysts say today’s rally may be more of a “technical bounce” than a sign that the market has truly stabilized. Investors should continue to closely monitor economic data and Fed statements amid concerns about tech valuations and policy risks.
- Optimistic scenario: If the Fed actually cuts rates in December or clearly shows the prospect of easing, that would be a big boost for the market. - Conservative scenario: Conversely, if inflation continues to rise or economic data worsens, the market could come under downward pressure as growth expectations are threatened. - Risks for tech & AI stocks: With valuations already very high, the possibility of a sharp correction still exists. Investors should control risks and pay attention to the "high expected valuation" of this group. |
Despite a positive end to the session on November 21, the overall picture for the US stock market is still not really solid. There are too many questions waiting to be answered: Has the tech rally peaked? Where will interest rates go? Will economic growth maintain its momentum? As one market strategist put it: “This Friday marks a pause in the swing, but not the end of the volatility.”
Source: https://thoibaonganhang.vn/pho-wall-bat-tang-cuoi-tuan-sac-xanh-tro-lai-giua-tam-bao-bien-dong-173967.html
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