US Markets Decline Despite Nvidia’s Record Earnings Surge

US markets experienced a downturn on Thursday, even as tech giant Nvidia reported exceptional earnings that surpassed analysts’ expectations. The decline was largely attributed to increasing investor skepticism regarding potential interest rate cuts from the US Federal Reserve. The tech-heavy Nasdaq composite dropped by 0.7%, the S&P 500 fell by 0.5%, and the Dow Jones Industrial Average decreased by 0.3%.

Nvidia’s strong performance initially sparked a market-wide rally, with its shares climbing by 5% before turning negative. Investors expressed concerns over inflated valuations of AI companies, which contributed to the pullback. Despite this, Nvidia’s earnings report showcased remarkable growth, with the company generating $57.01 billion in revenue for the third quarter, significantly exceeding its forecast of $54.92 billion. Furthermore, net income surged by 65% to $31.91 billion, driven by robust demand for its chips from major clients like Microsoft, Amazon, Google, and Meta.

Global Market Reactions

European markets reacted positively to Nvidia’s results, with the pan-European Stoxx 600 rising by 0.5%. Most European stock exchanges closed higher, reflecting a confident sentiment among investors regarding the sustainability of gains in AI stocks. In Asia, markets also saw an uptick, buoyed by technology sector performance.

In New Zealand, the share market closed 0.84% higher, recovering from previous losses. The NZX reported 101 gainers compared to 40 decliners. Notably, My Food Bag witnessed a rally after announcing a positive half-year financial result. The meal kit company reported a 3.8% increase in revenue, reaching $85.4 million, although its after-tax profit fell to $2.9 million from $3 million the previous year.

A2 Milk’s shares dipped by 0.47% to $10.70 following its annual general meeting, despite providing an upgraded revenue forecast for the fiscal year 2026. Investors expected a stronger outcome, reflecting ongoing volatility. Nevertheless, A2 Milk reported a record revenue of $1.9 billion, benefiting from improved trading conditions in key markets, particularly in infant formula.

Turners Automotive also reported strong financial results, achieving a record profit of $21.9 million for the first half of its financial year. The company attributed a 5% increase in group revenue to growth across auto retail, finance, and insurance sectors, which compensated for softer demand in credit management. Its share price increased by 0.78% to $7.77.

US Economic Outlook

In the United States, the Federal Reserve is not anticipated to implement any interest rate cuts in December, following the release of delayed jobs data for September. According to CNBC, markets are currently pricing in only a 35% chance of a quarter-point cut from the Federal Reserve. The jobs report showed a surprising addition of 119,000 jobs in September, exceeding expectations of 50,000.

As investors digest these developments, Nvidia’s optimistic forecast for the current quarter, projecting $65 billion in sales, highlights the ongoing demand in the AI sector. Chief Executive Jensen Huang remarked that sales for the company’s latest generation of GPU chips, known as Blackwell, are “off the charts.”

In today’s financial news, additional reports include Miriam Bell discussing Intrepid Travel’s confidence in New Zealand, Michael Wright covering a new creditor issue with GrabOne, and Tom Pullar-Strecker highlighting Meridian’s return to hydro development. Meanwhile, Synlait Milk and Sky TV are set to hold their annual shareholder meetings, while Oceania and Eroad will post their half-year financial results.