- Tech stock losses continue to drag down U.S. stock indexes.
- Bitcoin is trading at near six-month lows.
- A key earnings report and new federal labor data are due out this week.
Risk-averse investors bailing out of tech stocks and cryptocurrency tokens helped drive major stock indexes down, and bitcoin was trading near six-month lows ahead of key earnings reports and new federal jobs data due to be released later this week.
At the end of regular trading Tuesday, the Dow Jones Industrial Average was down nearly 500 points for the day, the S&P 500 slipped .83% and the Nasdaq Composite fell by 1.21%.
Industry watchers say a third quarter financial report from advanced microchip maker Nvidia due Wednesday could act as a bellwether for an investment community that is watching for signs of an overvalued artificial intelligence development sector. Nvidia’s stock value was down about 2% at the end of the regular trading day and other companies heavily invested in AI development, including Amazon and Microsoft, also saw losses.
The first federal labor data release since the government shutdown is also due out this week and the numbers will be parsed for signs of further weakening in the U.S. economy.
“The monthly jobs report would normally dominate this week’s economic calendar, but with the AI trade struggling the past couple of weeks, Nvidia’s earnings are once again looking like a key piece of the market’s momentum puzzle,” Chris Larkin, managing director at Morgan Stanley’s E-Trade, said in an email to CNN.
Why Nvidia’s earnings report matters
Nvidia has been at the center of a debate about the strength of the AI-powered market rally this year, per a report from CNBC, as concerns have grown about lofty tech valuations and the soundness of AI fundamentals due to a boom in Big Tech debt offerings.
“If the top company within the top industry within the top sector says very optimistic things about the future while at the same time reporting better than expected earnings, revenues and profit margins, I think that would go a very long way to calming investor nerves,” CFRA chief investment strategist Sam Stovall told CNBC.
“The real question is, ‘When do we monetize all of this (capital expenditure)?’ And that’s something that’s not going to happen this quarter or next, but it is something that is expected in the not too distant future.”
While bitcoin broke an all-time high last month, rising above the $125,000 mark for the first time, the cryptocurrency tokens have been on a downward slide since then and dipped briefly below $90,000 Monday. As of mid-afternoon Tuesday, bitcoin was trading for around $92,660 per token, according to tracking by CoinGecko.
A notice posted by the Labor Department’s Bureau of Labor Statistics indicates the agency’s September employment report, originally scheduled for release Oct. 3, will be posted on Thursday.