S&P 500 falls even with most stocks rising as traders dump AI names

The September jobs report was a mixed bag: much better job growth than anticipated, but the unemployment rate unexpectedly edged higher.

The release of this data, which was delayed by the government shutdown, showed that nonfarm payrolls grew 119,000 (compared to the expected 51,000), but the unemployment rate crept up to 4.4%, while economists thought it would remain steady at 4.3%.

Event contracts show that the likelihood of the US central bank standing pat in December moderated to about 65% from around 75% prior to the release.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

Job growth for the prior two months was revised lower by 33,000.

The market-implied odds of a Fed cut in December tanked on Wednesday after the Bureau of Labor Statistics said that the updated employment statistics through November wouldn’t be published until December 16 — that is, the week after the US central bank’s last meeting of the year.

During the press conference that followed the October decision to lower rates by 25 basis points, Fed Chair Jerome Powell said that a dearth of fresh data “could be an argument in favor of caution about moving,” adding that a rate cut in December was “far from” a foregone conclusion.

Fedspeak since that October rate cut has generally tilted hawkish. Some voting members like Boston Fed President Susan Collins and Kansas City President Jeffrey Schmid (who dissented from the last cut) have signaled that they are unlikely to support an interest rate cut in December. Fed Governors Chris Waller and Stephen Miran have publicly endorsed another rate reduction, while other officials have yet to take a definitive stance. The minutes from the October meeting said that “many participants” thought “it would likely be appropriate to keep the target rate unchanged for the rest of the year.”

You might expect a company that recently reached a $5 trillion market cap (the first in history to do so) to be a relatively mature enterprise; slowing down, with a fat cash cow at its core, multiple divisions pulling in billions of dollars, and a few exciting nascent bets on the future. You probably wouldn’t expect them to post a reacceleration in revenue growth.

But that’s exactly what Nvidia posted across its Q3 earnings yesterday, with its reported $51.22 billion in data center revenue giving a huge lift to risk sentiment.

With revenue and adjusted earnings per share beating by ~3%, and guidance that was even rosier, Jensen Huang and co. have given a shot in the arm to America’s entire AI complex. Aside from Nvidia itself, here are a few of the winners this morning:

• Companies directly in the semiconductor supply chain are catching a bid, with giants like Broadcom and AMD making the most notable moves in early trading, up 2.8% and 4.4%, respectively, as of 5 a.m. ET.

• Upstart data center players are making even bigger gains, with IREN and Cipher Mining up between 8% and 10%.

• Palantir is up 3.4%, aided by a mention from Nvidia’s CFO, who said that the company was “supercharging the incredibly popular Ontology platform with NVIDIA CUDA-X libraries and AI models for the first time,” having previously run the software on CPUs.

• The neoclouds are also soaring: CoreWeave is up more than 9%, as its business model is tightly wound with Nvidia’s own. Future demand to rent the ~250,000 Nvidia GPUs that CoreWeave owns feels more assured than ever. Nebius, which offers a full-stack solution for this “surge demand” for AI compute, is gaining as well, up about 7%.

• A number of stocks in the “powering the AI boom” theme are also springboarding from the chip designer’s results. Behind-the-meter energy play Bloom Energy is up more than 5%, while nuclear-geared stocks such as Constellation Energy, Oklo, and Nuscale have all caught a bid in premarket trading — with gains of 2.7%, 4.4%, and 7%, respectively, as of 4:40 a.m. ET.

• In the AI server space, Super Micro Computer is the standout, up nearly 6%. Data storage names like Western Digital and Seagate Technology Holdings are also trading modestly higher, paring some of their initial rise to be 2.5% and 3.4% higher, respectively, at the time of writing.

• Other speculative stocks and risk assets have also turned green since the results. Bitcoin reclaimed the $92,000 milestone and quantum stocks were up modestly, while equity markets in Europe and Asia traded higher and S&P 500 futures climbed 1%.

On the earnings call, Huang said that “AI is going everywhere, doing everything, all at once” — that is certainly the case in premarket trading.