ASX set to fall as Wall Street rally fizzles out; Nvidia gains wiped out

1 hour ago 2

By Stan Choe

November 21, 2025 — 5.24am

Big swings keep rocking Wall Street, and US stocks erased a huge morning gain on Thursday as skittishness continues to dominate the market following weeks of doubts and erratic moves.

The S&P 500 dropped to a loss of 0.7 per cent after initially soaring 1.9 per cent, which would have marked its best day since May. The Dow Jones was down 231 points, or 0.5 per cent, in early afternoon trade, and the Nasdaq composite was 1 per cent lower.

The Australian sharemarket is set for sharp losses, with futures at 5.11am AEDT pointing to a loss of 92 points, or 1.1 per cent, at the open. The ASX added 1.2 per cent on Thursday after Nvidia soothed market fears about an AI bubble with robust earnings and forecasts. The Australian dollar was trading at US64.58 at 5.24am AEDT.

The sharpest losses came again from what used to be the market’s biggest winners. Technology stocks, cryptocurrencies and other areas of the market that had been soaring with nearly relentless momentum, as traders feared missing out on more gains, dropped. Bitcoin fell below $US87,000 ($134,750), down from nearly $US125,000 last month, for example.

The market had been shaky coming into Thursday, largely because of twin worries: Nvidia and other superstar stocks caught up in the frenzy around artificial-intelligence technology may have simply shot too high, and the Federal Reserve may be done delivering the invigorating cuts to interest rates that Wall Street loves.

Nvidia initially appeared to tamp down the worries about a potential bubble for AI stocks after reporting another big profit for the summer that topped analysts’ expectations, along with a forecast for coming revenue that easily cleared analysts’ estimates. By delivering big profits and indicating more are coming, Nvidia can justify its stock’s price gains and make it look less expensive.

Given the forecasts that Nvidia gave late on Wednesday, “it is very hard to see how this stock does not keep moving higher from here,” according to analysts at UBS led by Timothy Arcuri. They also said “the AI infrastructure tide is still rising so fast that all boats will be lifted.”

Nvidia jumped to an early gain of 5 per cent but then dropped to a loss of 1.5 per cent, sending it again 10 per cent below its record. Because it’s the biggest company in the US market by value, Nvidia’s stock has more pull on the S&P 500 than any other company’s.

Worries about a potential AI bubble aren’t gone. The concern among investors is that all the dollars pouring into AI chips and data centres may not ultimately produce the big profits and productivity for the economy that proponents have been promising.

Yes, Nvidia expects to sell another $US65 billion of chips in the coming three months, which is more than analysts expected. But will all those chips turn into much bigger profits for Amazon and other companies using them? They still need to prove that all the investment in AI chips are worth the cost.

The most recent survey of global fund managers by Bank of America showed a record percentage of investors saying companies are “overinvesting.” That helped make a potential AI bubble the No. 1 risk that they saw for the market, one with a lower probability of happening but a chance of very big damage.

Amazon went from an early gain of 2.1 per cent on Thursday to a loss of 1.3 per cent. Palantir Technologies swung from a jump of 5.5 per cent to a loss of 4.3 per cent.

For the second worry that’s been dogging Wall Street, Thursday’s jobs report from the US government offered some relief.

Financial markets initially seemed to pick the data apart for encouraging signals, according to Seema Shah, chief global strategist at Principal Asset Management. The report showed hiring by US employers was stronger in September than economists expected, which may suggest the economy remains solid. But it also said the unemployment rate worsened slightly, which could give the Fed reason to cut its main interest rate at its next meeting in December.

Traders still see a December rate cut as relatively unlikely, giving it a roughly 40 per cent probability, according to data from CME Group. But that’s better than the 30 per cent chance they saw a day earlier, before the September jobs report.

What the Fed does is critical for the stock market because prices ran to records in part because of expectations for continued cuts to rates. The Fed has already cut rates twice this year to shore up the slowing job market. But lower rates can also worsen inflation, which has stubbornly remained above the Fed’s 2 per cent target.

On the winning side of Wall Street was Walmart, which rallied 5.8 per cent after the retailer delivered another standout quarter. It reported strong sales and profits that blew past Wall Street expectations as it continues to lure cash-strapped Americans nervous about the economy and prices.

In the bond market, the yield on the 10-year Treasury eased to 4.08 per cent from 4.13 per cent late Wednesday.

In stock markets abroad, indexes rose across much of Europe and Asia.

Japan’s Nikkei 225 jumped 2.6 per cent, and South Korea’s Kospi rose 1.9 per cent for two of the bigger gains.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.