Nvidia, Tesla stock hammered as tech selloff gets worse
Nvidia stock was down more than 3% at market open Friday and Tesla stock was down about 4%, as a selloff in tech stocks that had already pushed major stock indexes to their worst day in a month on Thursday appeared poised to continue and end the week.
The Dow Jones Industrial Average fell more than 530 points, or 1.1%, while the S&P 500 was down 1% and the tech-heavy Nasdaq was down about 1.2%. Other chip stocks also fell, as did AI chip giant Nvidia, with AMD shares down more than 4% and Micron Technology shares down about 1%.
The Dow hit 48,000 for the first time this week. But stocks retreated quickly from there, as the end of the longest federal government shutdown in U.S. history appeared to refocus investors’ concerns on the risk that the Federal Reserve would suspend interest rate cuts and fears of a bubble in AI stock valuations.
This is where the anxiety lies. More than forty days without a federal release means the Fed enters its next policy cycle with partial visibility. Some data will return quickly; some might never happen at all. Carol Schleif of BMO Private Wealth Management explained the fine print in a note: “While we always expected that many of the data points missed during the shutdown would remain obscure, questions arise about what inflation and employment data will look like once these reports are back online. She said she wouldn’t be surprised to see some “market contraction over the coming weeks” as the data pipeline comes back to life. Reopening Washington restores operations, not clarity.
Deutsche Bank’s Jim Reid said in a note that the week had been “certainly volatile in terms of sentiment, with relief over the end of the shutdown competing with concerns over AI valuations and whether the Federal Reserve would cut rates again.” The odds of a basis point decline on Dec. 25 are about 54%, according to the CME FedWatch tool — up from a 50% chance yesterday, but down from a 70% chance a week ago.
Traders now must balance a backlog of distorted indicators against a labor market that even before the shutdown was showing signs of unraveling. Because the government’s data pipeline was frozen during the shutdown, October’s jobs picture came from private-sector trackers — and those indicators weren’t pretty. Estimates point to job losses in the public sector and retail, as well as an increase in announced layoffs due to cost cuts and the growing reach of AI.
With the government returning to power — and the White House saying October’s unemployment data could disappear for good — no one knows how the missing data could reshape the trend line.
—Shannon Carroll contributed to this article.
