Wall Street experienced a turbulent trading session on Friday, with major indices closing mixed as investors anxiously await Nvidia's crucial earnings report next week while growing increasingly concerned about the Federal Reserve's potential delay in cutting interest rates.
Market Recovers From Early Selloff
The trading day began with significant pressure as all three major Wall Street indexes dropped more than 1% during early trading. However, the market demonstrated resilience by staging a partial recovery throughout the session. According to preliminary data, the S&P 500 declined by 2.70 points, or 0.05%, closing at 6,734.42 points, while the technology-heavy Nasdaq Composite managed to gain 29.17 points, or 0.13%, finishing at 22,899.53. The Dow Jones Industrial Average faced more substantial pressure, falling 308.29 points, or 0.65%, to settle at 47,148.93.
Nvidia Takes Center Stage
All eyes are now focused on Nvidia, which is scheduled to report its quarterly results on Wednesday. As the leading AI chipmaker, Nvidia's performance is viewed as a critical barometer for the artificial intelligence sector that has driven much of the U.S. stock market's gains in recent years. Market experts emphasize the significance of this upcoming report.
Mike Dickson, head of research and quantitative strategies at Horizon Investments in Charlotte, North Carolina, highlighted the event's importance: "We've got a huge event next week with Nvidia. If Nvidia disappoints, they will be punished. But I also think that - kind of like you're seeing today - you'll see dip buyers come back in pretty quickly and stabilize things."
Several major technology companies including Nvidia, Palantir, Microsoft, and Tesla all posted gains during the session, indicating continued investor interest in AI-related stocks despite concerns about their elevated valuations.
Federal Reserve Rate Cut Expectations Diminish
Investor optimism about potential rate cuts in December has significantly faded in recent days amid persistent inflation concerns, partly driven by U.S. President Donald Trump's global tariffs. The probability of a 25-basis-point rate cut during the Fed's December policy meeting has dropped dramatically to under 50% from 67% just last week, according to CME Group's FedWatch tool.
Adding to the hawkish sentiment, Kansas City Fed President Jeffrey Schmid expressed concerns on Friday that extend beyond tariff impacts alone. He stated his worries about "too hot" inflation could lead him to dissent again at the Fed's December meeting if policymakers consider cutting short-term borrowing costs. Schmid was one of two dissenters in the Fed's October decision to lower the policy rate by a quarter of a percentage point.
Investors also continue to monitor the labor market's health and inflation outlook, with expectations that some permanent gaps will remain in official economic data even after the record-long U.S. government shutdown ended on Thursday.
Notable Corporate Developments
In significant corporate news, Cidara Therapeutics shares skyrocketed, doubling in value after Merck announced it will acquire the company in a nearly $9.2 billion deal. This major pharmaceutical acquisition represents one of the largest deals in the sector recently and demonstrates continued consolidation in the healthcare industry.
Warner Bros Discovery also gained ground after the entertainment company revealed it had amended CEO David Zaslav's employment agreement as part of a strategic business review.
In global trade developments, the Swiss government confirmed that U.S. tariffs on Swiss goods will be reduced to 15% from 39%, providing some relief in international trade relations.
As markets head into the weekend, investor attention remains sharply focused on next week's Nvidia earnings and any further signals from Federal Reserve officials regarding the future direction of interest rates.
