New York Stocks Rise Across the Board on Nvidia's Surprise Earnings; September Jobs Also Beat Expectations

Nvidia Rises 2% on Strong Q3 Earnings, Beating Expectations
AI Bubble Concerns Ease, Driving Market Gains
September Employment Doubles Forecasts, but Unemployment Rate Edges Up
Mixed Signals Boost Rate Cut Expectations; Outlook Remains Uncertain

On November 20 (local time), all three major U.S. stock indexes showed gains. The strong earnings report from artificial intelligence (AI) superstar Nvidia has helped calm recent concerns about an AI bubble, leading to increased buying activity, particularly among technology stocks. The first employment report released since the federal government shutdown also indicated that the U.S. labor market is more resilient than expected.

On the 20th (local time), a trader is working on the trading floor of the New York Stock Exchange (NYSE) in the United States. Photo by AFP Yonhap News

As of 11:27 a.m. on the New York Stock Exchange, the blue-chip Dow Jones Industrial Average was up 318.67 points (0.69%) from the previous trading day at 46,457.44. The large-cap S&P 500 Index rose 57.41 points (0.86%) to 6,699.57, while the tech-heavy Nasdaq Index climbed 244.674 points (1.08%) to 22,808.903.

Nvidia's surprise earnings appear to be providing strong support for investor sentiment. The company announced after the previous day's market close that its revenue for the third quarter of its fiscal year (August to October) increased by 62% year-on-year to a record high of $57.01 billion. Earnings per share (EPS) came in at $1.30. Both revenue and EPS exceeded estimates from financial information provider LSEG ($54.92 billion and $1.25, respectively). Nvidia also projected fourth-quarter revenue of $65 billion, higher than market expectations. Jensen Huang, CEO of Nvidia, dismissed concerns about an AI bubble, stating that demand for the company's Blackwell AI chips is "tremendous."

This earnings announcement helped ease recent concerns about overvaluation in AI-related stocks and the widespread 'circular investment' structure in the industry. Recently, companies like Nvidia and Amazon, which specialize in AI chips and cloud services, have been investing in AI developers such as OpenAI and Anthropic, while these developers in turn purchase computing resources from the same companies. This has led to concerns about an overheated market.

Daniel Newman, CEO of the technology advisory firm Futurum Group, said in an interview with CNBC, "The current bearish sentiment is breaking down, and AI trading remains robust," adding, "Margins are strong, and concerns about China are exaggerated."

Employment indicators also showed stronger-than-expected results. According to the Bureau of Labor Statistics (BLS) under the Department of Labor, nonfarm payrolls increased by 119,000 in September, far surpassing the market expectation of 53,000. However, the unemployment rate edged up from 4.3% in August to 4.4% in September, which is largely attributed to the labor force participation rate rising to 62.4%.

Unemployment benefit indicators showed mixed results. Initial jobless claims for the week of October 30 to November 5 totaled 220,000, down 8,000 from the previous week. In contrast, continuing claims for the week of November 2 to 8 increased by 28,000 from the previous week to 1,974,000, the highest level since November 2021 (2,041,000). This increase appears to have been influenced by a rise in claims from federal employees due to the shutdown.

These indicators show that the labor market slowdown is not proceeding as rapidly as expected. However, some point out that since the September figures reflect the situation two months ago, there are limitations in assessing the current trend.

Daniel Zhao, lead economist at the job search platform Glassdoor, said, "The September employment report shows that the labor market remained resilient even before the shutdown, and wage levels also exceeded expectations." He added, "However, since August employment figures were revised downward to show job losses and the unemployment rate increased, the situation remains uncertain. This data only reflects conditions from two months ago and does not capture the current situation in November."

The market has slightly increased its expectations for a rate cut in December, taking into account the mixed signals of rising nonfarm payrolls, a higher unemployment rate, and an increase in continuing jobless claims. According to CME FedWatch, the market now sees a 43.8% chance that the Federal Reserve will cut its benchmark interest rate, currently at 3.75-4.0% per year, by 0.25 percentage points next month, up from 30.1% the previous day. The probability of a rate hold fell from 69.9% to 56.2% over the same period.

By stock, Nvidia is up 1.99%. Broadcom is rising by 3.92%. Alphabet, the parent company of Google, is showing a strong gain of 2.44%. U.S. retail giant Walmart has surged 6.6% following stronger-than-expected earnings and an upward revision of its annual outlook.

U.S. Treasury yields are trending downward. The 10-year Treasury yield, a global benchmark, fell 3 basis points (1bp = 0.01 percentage points) from the previous day to 4.09%, while the 2-year Treasury yield, which is sensitive to monetary policy, also declined by 3 basis points to 3.56%.