Stocks Fall After Early Rally Despite Strong Nvidia Earnings and Solid Jobs Report

U.S. stocks fell back into negative territory on Thursday afternoon, reversing a sharp rally that followed strong quarterly results from Nvidia and a September jobs report that came in above expectations.

By midday, the Dow Jones Industrial Average was down roughly 60 points, or 0.1%, the S&P 500 slipped 0.2%, and the Nasdaq Composite declined 0.3%.
These declines erased a strong start to the session, when all three major indexes moved sharply higher on the back of tech earnings and solid economic data.

Earlier in the morning, the Dow had been up 1.2%, the S&P 500 gained 1.8%, and the Nasdaq jumped 2.5%, reflecting initial enthusiasm around Nvidia’s performance and the stronger labor market reading.

Nvidia’s Blockbuster Earnings Lose Momentum After Early Surge

Shares of Nvidia, now one of the most valuable companies in the world with a market cap near $4.7 trillion, slipped 0.1% by midday.
This came after the stock rallied early in the session following a quarterly report that once again topped expectations.

Nvidia’s numbers temporarily eased concerns about whether AI-linked stocks had risen too far, too quickly. In recent days, some investors warned that the rapid run-up in AI chip and infrastructure names resembled a speculative bubble. Nvidia’s results pushed back against those fears in the short term, showing continued demand for its high-end chips used in AI training and data-center systems.

Even with the midday pullback, the company remains one of the primary contributors to 2025’s market performance:

• S&P 500 up 15% this year

• Dow up 10%

• Nasdaq up 19%

Much of this strength has been tied to companies whose products are central to AI computing.

September Jobs Report Provides a Lift — With One Warning Sign

Thursday’s rally was also fueled by a new hiring report showing far stronger job creation than economists expected.

The U.S. added 119,000 jobs in September, according to the Bureau of Labor Statistics.
This reading is above both the consensus forecast and the average pace of gains seen earlier this year.

But the improvement came with a notable revision:
August’s initial estimate of 22,000 jobs gained was corrected to 4,000 jobs lost.
The updated figure highlights how uneven the labor market has been in recent months, even with September’s rebound.

Hiring had slowed through much of the summer, raising concern that employers were cutting back as inflation remained stubborn and borrowing costs stayed high. Thursday’s report offered a partial counterweight to those worries.

Walmart’s Results Show Consumers Still Spending

Walmart reported quarterly revenue that came in above expectations on Thursday. The company said it saw steady store traffic and continued growth in online orders.
Traders said the report suggested that many households are still spending on everyday items, even with prices higher than a year ago.

Walmart’s results helped counter concerns that buyers had begun cutting back sharply in recent months. The company’s update was viewed as one of the few clear readings on how consumers handled higher costs heading into the fall.

Fed and Inflation Update

Inflation has increased in recent months while hiring slowed, creating a combination that economists say could strain both households and businesses. Some analysts have described the risk as a version of “stagflation,” where prices rise while economic activity softens.

The Federal Reserve has responded to this uncertainty by cutting interest rates by a quarter point at each of its last two meetings.
Those cuts were linked to signs of weakening hiring earlier in the year.

Thursday’s economic data influenced expectations for the central bank’s next decision:

• Odds of a quarter-point cut next month rose from 33% on Wednesday

• to 43% on Thursday morning, according to the CME FedWatch Tool

This shift suggested that investors saw the new data — both hiring and earnings — as potentially giving the Fed more room to ease policy.

Midday Drop After Strong Start

Stocks turned lower even after a strong opening, and traders pointed to specific developments during the session that shifted momentum.

Tech stocks lost early strength

Nvidia’s surge cooled as the morning progressed, pulling several large tech names down with it. The pullback erased much of the early jump in the Nasdaq, which had gained more than 2% at the open.

Revised labor numbers added caution

While September hiring was strong, the sharp downward revision to August raised concerns about how steady the job market actually is. Some traders said the revision limited the boost normally expected from a strong monthly report.

Inflation worries remained in focus

Recent inflation readings continued to weigh on the market. Investors said the combination of higher prices and the earlier revision to August jobs made the morning optimism hard to sustain.

Interest-rate expectations shifted through the day

Rate-cut expectations ticked higher after the jobs report, but traders said uncertainty about the Federal Reserve’s next move kept buyers from holding early gains. The view that the Fed could still wait for more data led some investors to step back from the morning rally.

Afternoon Trading Lost Early Strength

Stocks weakened in the afternoon after losing the lift they had received from Nvidia and the morning jobs data. Nvidia’s early jump faded through the session, and several other large tech stocks followed the same pattern, pulling the Nasdaq and S&P 500 lower.

The revised August hiring figures also drew attention once they circulated more widely during the day. The update showed a loss rather than a gain for that month, which led some investors to re-evaluate the strength of the earlier jobs reading.

Bond yields rose slightly in the early afternoon, which added pressure on portions of the market that had rallied in the morning. Some investors said the move made short-term trades less attractive and contributed to the pullback in equities.

Market activity now depends on the next round of government data, including updated inflation numbers due next week, which will influence how investors position themselves ahead of the Federal Reserve’s next meeting.

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