Market pullback hits risk assets as Nvidia optimism cools and stronger jobs data reduces near-term rate-cut hopes. Stocks jumped in the morning after upbeat corporate and chip sector news, then reversed into a 1.6 percent decline for the S&P 500. Short term this matters because traders are recalibrating valuations for AI and growth names. Over the long term it matters because investor exposure to new entrants, ETFs and corporate crypto holdings increases sensitivity to rapid repricing. Globally this weighs on equities from the US to Europe and Asia. Locally US rate expectations are moving higher relative to recent assumptions. The swings echo the late 2024 rotation from growth into more defensive holdings, while the October bitcoin peak highlights how concentrated flows can accelerate both rallies and selloffs.
Market snapshot: early rally gives way to risk-off close
The S&P 500 closed down 1.6 percent after an intraday rebound failed to hold. The Nasdaq showed sharper weakness as technology and AI-linked names were hardest hit. Western Digital (NASDAQ:WDC) stood out among AI infrastructure plays after an early rise and then an abrupt fall, finishing the session down 8.9 percent. Traders reacted quickly to mixed signals from corporate results and macro data, taking gains where valuations had run high in recent weeks.
In the morning, investor appetite was encouraged by several large companies reporting better-than-expected results. Walmart (NYSE:WMT) raised its full-year outlook, citing another quarter of strong performance and double-digit growth in e-commerce. Nvidia (NASDAQ:NVDA) provided the most attention grabbing report, raising guidance and describing strong demand for its Blackwell chips as “off the charts.” That sequence pushed the S&P up and the Nasdaq even more, before profit taking intensified.
Drivers of the reversal: Nvidia optimism, jobs data, and valuation concerns
Nvidia’s earnings and outlook initially accelerated risk-on flows, but that same news provoked fresh questions on lofty AI valuations. On the company call, CEO Jensen Huang framed demand for Blackwell chips as exceptionally strong. However, investors returned to valuation math by afternoon and began reducing exposure to names priced for perfection.
Meanwhile the US labor market update complicated the picture. A delayed government release showed 119,000 jobs added in September. Stronger than previously thought payrolls reduce the probability of a near-term rate cut in the minds of investors. That development dampened enthusiasm for higher beta assets and cryptocurrencies because lower rates had been a core justification for elevated risk asset valuations. In addition, the good news on jobs tightened the link between macro resilience and corporate earnings expectations, prompting a rebalancing between growth and more defensive sectors.
Crypto pressure deepens November slump
Bitcoin fell below $87,000 during the session, down roughly 3.5 percent over the past 24 hours. The move is part of a broader drawdown that accelerated after the October all-time high of $126,080. Many new investors entered the market this year through ETFs and corporate treasury purchases which increased the base of investors who bought near the peak.
That widened participation has increased sensitivity to drawdowns. This month bitcoin has crossed below the $90,000 threshold multiple times, marking its deepest pullback since April. The retreat reflects both portfolio rebalancing in response to equity weakness and renewed concern about how quickly speculative flows can reverse. The crypto rout also interacts with equity markets because several publicly traded firms hold bitcoin on balance sheets, amplifying sell pressure when risk appetite erodes.
Corporate movers: retail, health deals and consumer playbooks
Retail and consumer stories added texture to the day’s action. Bath & Body Works (NYSE:BBWI) shares plunged after management unveiled a turnaround that disappointed investors. The plan includes exiting men’s grooming and hair care categories, a move that investors read as signaling tougher execution ahead. The retreat highlights how fine tuning assortments and merchant strategies can swing investor sentiment for high turnover retail names.
In healthcare M&A, Abbott Laboratories (NYSE:ABT) agreed to acquire Exact Sciences (NASDAQ:EXAS) in a deal valued at about $21 billion. Exact Sciences is known for early cancer detection tests. The transaction underscores how large health platforms are expanding into diagnostics and preventive care, a structural story with longer term implications for revenues and margins in the sector.
On the consumer engagement front, McDonald’s (NYSE:MCD) announced a pop culture tie in for the holidays with a Grinch Meal debuting December 2. The limited time offering includes a dill pickle seasoning on fries and branded merchandise. Fast food operators are increasingly using novelty menu drops and brand partnerships to drive traffic during seasonal windows, a strategy that can boost comps but also invites sharp investor reactions when sales miss or the initiative disappoints.
Context and what to watch next
Today’s session underlines how rapidly sentiment can swing when high multiple stocks and concentrated flows meet macro surprises. Earnings that accelerate growth narratives can initially lift markets, while the same reports can quickly produce skepticism when they force investors to reweight risk. The stronger jobs reading reduced immediate expectations for policy easing, which in turn made speculative positions more expensive in relative terms.
In the near term, market participants will monitor upcoming corporate reports for confirmation of demand for AI related products and services. They will also watch macro prints for inflation and employment to gauge how quickly rate expectations may change. For cryptocurrencies, price stability will depend on whether institutional and retail holders absorb past gains without large scale liquidation. Across sectors, the current environment is favoring firms with clear, repeatable cash flows and disciplined capital allocation stories.
This session was a reminder that headlines can both accelerate rallies and trigger sharp reversals. The interplay between corporate news, macro data and concentrated investor positions is likely to remain an important force shaping volatility in the weeks ahead.
