Stocks rally as Nvidia eases AI valuation worries: Markets wrap

20/11/2025 04:29 AST

Stocks jumped after a robust forecast from Nvidia Corp. eased worries about a potential bubble in the artificial intelligence industry that had recently roiled markets globally.

Nvidia jumped 5% in post-market trading after reporting earnings, boosting other AI shares.

Futures on the S&P 500 rose 1.2%, while Nasdaq 100 contracts climbed 1.7%, as relief from the key risk event lifted sentiment following a week of turbulence over AI exuberance.

Alphabet Inc. soared after a wave of glowing reviews for the newly released version of its Gemini AI model.

Asian shares joined the rally, with Japan's Nikkei 225 surging 3.2% and South Korea's Kospi - a poster child of the AI boom and one of this year's top-performing markets - gaining 2.6%. Bitcoin rose to trade above $92,000.

Elsewhere, the dollar broadly held its gains after posting its biggest advance since late September. Treasuries steadied after edging lower in the previous session as bets for an interest-rate reduction by the Federal Reserve eased amid a cloudy outlook on the labor market.

"Relief is probably the word," said Matthew Haupt, a portfolio manager at Wilson Asset Management in Sydney, referring to Nvidia's earnings.

"We needed a circuit breaker for the selloff in equity markets as sentiment was turning south and they delivered a great result."

Nvidia's strong results helped restore a tentative sense of calm after weeks of heavy selling in technology stocks, as Wall Street grew uneasy about stretched valuations and the returns on massive corporate investments. Another key focus for investors is the path of interest rates, with traders nearly pricing out a Fed cut next month amid a data blackout.

Traders scaled back expectations for a quarter-point reduction after the Bureau of Labor Statistics said it won't publish an October jobs report, but will incorporate the payrolls figures into the November data due after the Fed's final meeting of 2025.

That leaves Fed officials without a key piece of economic data before their final meeting of the year. Odds are now heavily pointing to policymakers keeping the benchmark rate on hold at the 3.75% to 4% range.

"This information blackout is viewed as amplifying divisions within the Fed board and pushing them toward an 'on hold' decision at the December FOMC meeting," Tony Sycamore, a strategist at IG Markets, wrote in a note.

Minutes from the Fed's October meeting showed many central bank officials said it would likely be appropriate to keep rates steady for the remainder of 2025. The document came out on the eve of the September jobs report.

"There's no consensus at the Fed with policymakers flying blind, but these minutes lean hawkish overall," said David Russell at TradeStation.

Elsewhere, Japan's Finance Minister Satsuki Katayama said she confirmed the need to monitor market movements with Bank of Japan Governor Kazuo Ueda and Growth Strategy Minister Minoru Kiuchi, as the officials reaffirmed a joint accord aimed at overcoming deflation and achieving sustainable growth.

Yields on Japan's 5- and 10-year government bonds rose to their highest levels since 2008, as markets brace for Prime Minister Sanae Takaichi's stimulus package, which is set to be unveiled on Friday.

Back to stocks, Thursday's rally came after a bruising run of losses that pushed a global gauge of stocks to the lowest in a month.

Wall Street executives have also urged caution, warning investors to brace for further losses. Goldman Sachs Group Inc. President John Waldron said Wednesday, "technicals are kind of more biased for more protection, and more downside."

With so much at stake, Nvidia's earnings were critical for traders assessing the future of AI spending. Nvidia said its sales will be about $65 billion in the fiscal fourth quarter, which runs through January. Analysts had estimated $62 billion on average, with some predictions ranging as high as $75 billion.

The earnings "gave a much-needed break that the US tech sector and the broader market have been waiting for a week or longer," said Anna Wu, a cross asset strategist at Van Eck Associates Corp.

Some of the main moves in markets:

Stocks
S&P 500 futures rose 1.2% as of 10:45 a.m. Tokyo time
Japan's Topix rose 2.3%
Australia's S&P/ASX 200 rose 1%
Hong Kong's Hang Seng rose 0.5%
The Shanghai Composite rose 0.5%
Euro Stoxx 50 futures rose 0.9%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.1526
The Japanese yen was little changed at 157.30 per dollar
The offshore yuan was little changed at 7.1174 per dollar

Cryptocurrencies

Bitcoin rose 2.2% to $92,477.18
Ether rose 1.7% to $3,038.49

Bonds

The yield on 10-year Treasuries was little changed at 4.14%
Japan's 10-year yield advanced 3.5 basis points to 1.800%
Australia's 10-year yield advanced six basis points to 4.47%

Commodities

West Texas Intermediate crude rose 0.4% to $59.68 a barrel
Spot gold rose 0.4% to $4,093.18 an ounce

Bloomberg