Global Stocks Tumble as Fed Rate Uncertainty and Tech Sell-Off Rock Markets

Global stock markets fell sharply Friday, weighed down by muddy U.S. jobs data and surging anxiety over Federal Reserve rate policy. The worst losses appeared in tech-heavy indices, wiping out earlier gains and driving volatility across major trading centers.

Wall Street posted dramatic swings Thursday. The S&P 500 sank 1.6% to 6,538.76 after climbing as much as 1.3% earlier in the day. The Nasdaq plunged 2.2% to 22,078.05, the largest one-day swing since April 9. The Dow Jones Industrial Average lost 0.8% to 45,752.26, erasing a 700-point rally.

Mixed Employment Report Clouds Fed Outlook
The September employment report—delayed seven weeks by a government shutdown—showed 119,000 new jobs, more than double economists’ expectation of 50,000. But the unemployment rate climbed to 4.4%, its highest since October 2021. Previous months’ figures were revised downward, revealing a 4,000 job loss in August instead of a previously reported 22,000 gain.

These ambiguous numbers left both investors and Fed officials divided over next steps. The CME FedWatch tool now puts the odds of a December rate cut at just 40%, up slightly from 30% but sharply down from 97% in mid-October. “This report was never going to give a clear green light for a December cut,” commented Prashant Guha at Evercore.

Fed leaders have stressed caution. Cleveland Fed President Beth Hammack warned that further rate reductions now would pose “major risks to the economy.” Fed Governor Lisa Cook voiced concern about “excessive declines in asset prices.” Minutes from the Fed’s October meeting revealed that many officials believe a rate cut in December is not justified.

Tech Stocks Hit Hard Despite Nvidia’s Performance
The stock market initially jumped after Nvidia reported $57 billion in quarter revenue—a 62% annual surge—beating the expected $54.9 billion. The company forecast $65 billion for next quarter, above consensus. Nvidia shares had risen 5% in after-hours trading Wednesday, but reversed to close nearly 3% lower Thursday as worries about lofty valuations resurfaced.

Asian trading extended the rout Friday. The broadest MSCI index for Asia-Pacific ex-Japan dropped 1.8%-2.2%, with weekly losses at 3%—the worst since early April. Japan’s Nikkei fell 2.2% on the day and 3.3% for the week. South Korea’s market slid 3.7%, Taiwan 3.4%, and Hong Kong’s Hang Seng lost 2.4%.

“What started as a classic ‘Nvidia rebound’ turned into one of the sharpest intraday reversals since April’s collapse,” noted SPI Asset Management’s Stephen Innes. U.S. Treasury yields dipped slightly, with the 10-year remaining near 4.1%. The dollar rose to 157.40 yen after touching a 10-month high at 157.9.

Sources:
MarketScreener, CNN, ClickOnDetroit, Finance Yahoo, Perplexity, Morningstar, Barron’s, and Business Insider.