NEW YORK — NEW YORK — A fragile U.S. stock market is flipping between gains and losses again on Friday, but the moves aren’t as extreme as they’ve been in recent weeks, at least not yet.
The S&P 500 rose 0.1 per cent after bobbing up and down earlier in the morning. The Dow Jones Industrial Average was up 217 points, or 0.5 per cent, as of 11 a.m. Eastern time, and the Nasdaq composite was down 0.2 per cent.
Stocks appeared to find support from a speech by the president of the Federal Reserve Bank of New York. Markets perked up immediately after John Williams told a conference in Chile that he sees “room for a further adjustment” for interest rates.
That could signal he’ll vote for another cut to rates in December. What the Fed does is critical for Wall Street because stock prices ran to records through last month in part because of expectations for a series of invigorating cuts.
Other Fed officials, though, have argued against a December cut given how high inflation remains. The uncertainty created by such open and sharp disagreement has triggered dramatic swings for markets, as has the other dominant question for Wall Street: whether prices have shot too high for stocks linked to the artificial-intelligence boom, cryptocurrencies and other stars.
Those swings hit a crescendo on Thursday, when U.S. stocks initially surged after Nvidia seemed to tamp down worries about a potential AI bubble. But the market quickly dropped to a sharp loss for its biggest reversal since April, when President Donald Trump shocked markets with his “Liberation Day” tariffs.
Despite the strong profit report from Nvidia, whose chips are powering the move into AI, worries are still hanging around about the longer term. Will all those AI chips and data centers that Amazon, Meta Platforms and other companies are paying for actually turn into big profits and productivity? If not, some investors fear, all the investment won’t be worth it.
AI-linked stocks were still skittish on Friday. Nvidia went from an initial gain to a drop of 2.8 per cent, for example. Palantir Technologies also swung from an early rise to a drop of 4.1 per cent.
Other big swings also continued underneath the market’s surface. Bitcoin briefly plunged below US$81,000, before pulling back toward $83,000. That’s down from nearly $125,000 last month, and bitcoin is back to where it was in April, when markets were shaking because of Trump’s tariffs.
The majority of stocks on Wall Street nevertheless rose. Their movements often get drowned out by Nvidia and other Big Tech stocks, whose movements have much more effect on the S&P 500 because of their immense sizes.
“When the largest companies drive most of the losses, the market can look weaker than it really is,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Several retailers helped lead the market. Gap jumped 5.1 per cent after the apparel company reported a stronger profit for the latest quarter than analysts expected. CEO Richard Dickson said it saw strong sales trends at each of its Old Navy, Gap and Banana Republic brands.
Ross Stores rose 6.5 per cent after it likewise delivered a better profit than expected. CEO Jim Conroy said it saw broad-based growth during the quarter and raised the company’s forecast for an important measure of sales during the holiday shopping season.
Homebuilders were also strong as hopes rose for lower interest rates, which could make mortgages cheaper to get and give a kick to the housing market. D.R. Horton jumped 6 per cent, PulteGroup gained 5.3 per cent and Lennar rose 5.1 per cent.
In the bond market, Treasury yields eased following Williams’ speech. The yield on the 10-year Treasury fell to 4.06 per cent from 4.10 per cent late Thursday.
Traders are now betting on a 75 per cent probability of a December cut, up sharply from 39 per cent a day before, according to data from CME Group.
Treasury yields edged further down after a report from the University of Michigan said U.S. consumers’ expectations for inflation in the coming year and in the longer term aren’t as bad as they were a month before.
That could give the Fed more leeway to cut rates, because increasing expectations of inflation can lead to a vicious cycle that only worsens it.
In stock markets abroad, indexes were mixed in Europe after markets tumbled in Asia following Wall Street’s stunning reversal.
Japan’s Nikkei 225 fell 2.4 per cent, and South Korea’s Kospi dropped 3.8 per cent for two of the larger losses.
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Stan Choe, The Associated Press
AP Writers Teresa Cerojano and Matt Ott contributed.