Stock Market Stabilizes After Sharp Swings Driven by AI, Crypto Volatility/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock markets opened higher Friday, steadying after Thursday’s sharp volatility triggered by AI and crypto concerns. Fed comments hinting at possible December rate cuts boosted investor sentiment and lowered Treasury yields. AI stocks like Nvidia and cryptocurrencies remained shaky, while retail earnings from Gap and Ross offered stability.
Quick Look:
- The S&P 500, Dow Jones, and Nasdaq posted modest early gains on Friday.
- Federal Reserve comments suggested possible interest rate cuts, boosting investor sentiment.
- AI stocks and cryptocurrency remain volatile, despite strong earnings from Nvidia.
- Retailers like Gap and Ross Stores posted strong earnings, offering stability.
- Global markets remain mixed after Thursday’s major market reversal.
Stock Market Stabilizes After Sharp Swings Driven by AI, Crypto Volatility
Deep Look
NEW YORK — After a turbulent Thursday that marked the U.S. stock market’s most volatile day since April, investors saw modest gains and a steadier tone Friday morning. The bounce comes amid a tug-of-war between Federal Reserve policy, high-flying tech valuations, and shaky crypto markets.
- S&P 500 was up 0.3%
- Dow Jones Industrial Average rose 187 points (or 0.4%)
- Nasdaq Composite ticked 0.2% higher
Investors appeared cautiously optimistic, following remarks from John Williams, president of the New York Federal Reserve. Speaking at a Chilean economic conference, Williams said there may be “room for a further adjustment” in interest rates in the near term — a signal that rate cuts could be on the table as soon as December.
Why Fed Comments Matter
Traders interpreted Williams’ comment as a potential green light for a third rate cut this year. The market’s surge through October had been fueled by expectations of multiple interest rate reductions aimed at stimulating economic growth. However, doubts had grown in recent weeks due to stubborn inflation and uncertainty over the Federal Reserve’s trajectory.
Now, CME Group data shows traders placing a 75% probability on a December rate cut — a jump from 39% just 24 hours earlier.
Thursday’s Wild Reversal: AI-Fueled Mania Hits a Wall
Thursday saw stocks open sharply higher after Nvidia released stellar earnings, calming fears of a bubble in artificial intelligence investments. But by day’s end, the market had swung to significant losses — the sharpest intraday reversal since April, when Trump’s surprise announcement of new “Liberation Day” tariffs rattled global markets.
Nvidia, a bellwether for AI enthusiasm, initially surged before slipping 1.1% by Friday morning. Despite strong sales of AI chips, investor concerns linger about whether corporate investments in AI infrastructure will lead to long-term profits and productivity.
Other AI-linked names remained volatile:
- Palantir Technologies regained 0.8% Friday after falling 5.8% Thursday.
- Meta, Amazon, and Alphabet saw continued investor scrutiny.
Cryptocurrency Plunge Adds to Market Jitters
Adding to Wall Street’s unease, Bitcoin dropped below $81,000 before rebounding to around $85,000 — down from nearly $125,000 in October. This marks a steep decline from its recent highs and echoes the kind of market uncertainty seen in the wake of Trump’s trade measures earlier this year.
Crypto’s slide highlights growing skepticism over whether the digital asset surge was premature, especially if rate cuts stall or inflation persists.
Retail Resilience: Gap and Ross Stores Post Strong Earnings
Amid broader volatility, some traditional retailers helped buoy sentiment:
- Gap Inc. jumped 6.2% after beating quarterly earnings expectations, citing robust sales across Old Navy, Gap, and Banana Republic.
- Ross Stores surged 4.9%, raising its holiday forecast after reporting broad-based quarterly growth.
These earnings provided a rare bright spot and suggested American consumers are still spending, even as inflation and borrowing costs remain elevated.
Bond Market Reaction: Yields Ease on Rate Cut Bets
As expectations for rate cuts gained steam:
Bond markets are closely tied to Fed expectations — when rates fall, bond prices rise and yields drop. Though the Fed has already cut rates twice in 2025, inflationary pressures have limited further action. Now, investors are betting that signs of labor market cooling could tilt the Fed toward additional cuts in December.
Global Markets: Mixed Signals Across Asia and Europe
Stock indexes abroad reacted to Wall Street’s chaos:
- Japan’s Nikkei 225 tumbled 2.4%
- South Korea’s Kospi sank 3.8%
- European markets were more subdued, trading mostly mixed as of Friday morning
Asian markets were particularly sensitive to Thursday’s reversal in U.S. equities, with tech and semiconductor firms in Japan and South Korea bearing the brunt of losses.
Looking Ahead: Can Markets Hold Steady?
Friday’s early gains offered a bit of breathing room after a rollercoaster week. But investors remain on edge, watching for:
- Federal Reserve signals ahead of its December meeting
- Further AI earnings results and outlooks
- Continued crypto volatility
- Holiday retail performance and consumer confidence
With economic uncertainty still looming, Wall Street is far from out of the woods — but for now, the market has hit the brakes on its recent whiplash.
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