A trader at the New York Stock Exchange. New York AFP=Yonhap News. 

The New York stock market closed lower on the 20th (local time), reversing from a sharp intraday decline due to continued concerns about an artificial intelligence (AI) related stock bubble.

Although Nvidia, the "leading stock" for AI chips, announced strong earnings that seemed to revive stagnant investor sentiment, it only managed to support a brief rally until the morning of that day.

On this day, the Dow Jones Industrial Average closed at 45,752.26, down 386.51 points (-0.84%) from the previous day.

The S&P 500 index closed at 6,538.76, down 103.40 points (-1.56%) from the previous day, and the tech-heavy Nasdaq index closed at 22,078.05, down 486.18 points (-2.15%) from the previous day.

The New York stock market started strong, boosted by Nvidia's strong earnings announcement.

In its earnings report released after the market close on the previous day, Nvidia announced that its third-quarter revenue surged 62% year-over-year. It also raised its full-year earnings outlook higher than market expectations.

In a statement accompanying the earnings, CEO Jensen Huang said, "Blackwell sales are off the charts, and cloud GPUs are sold out."

During the subsequent conference call with institutional investors, he expressed confidence, stating, "There's a lot of talk about an AI bubble, but from our perspective, it looks very different."

Investors cheered Nvidia's strong earnings and CEO Huang's remarks, with Nvidia, the largest company by market capitalization, seeing its stock price rise by 5% in early trading.

However, the rally did not last long. Buying momentum noticeably weakened during morning trading, and the gains were quickly erased. Concerns about market overvaluation resurfaced, and around noon, the S&P 500 index reversed to a decline.

The intraday decline from the peak to the low of the Nasdaq Composite Index on this day reached 5%. This was the largest intraday fluctuation since April 9, when market volatility sharply increased following the announcement of U.S. President Donald Trump's reciprocal tariff policy.

Nvidia ultimately fell 3.15% on this day, with an 8% drop from its intraday high.

Semiconductor manufacturer Micron saw its stock price drop by 10.87% on this day, and other semiconductor stocks such as AMD (-7.84%), Palantir (-5.85%), Intel (-4.24%), and Qualcomm (-3.93%) all plummeted.

The September employment report, which showed mixed indicators regarding the labor market, failed to revive expectations for a December interest rate cut by the U.S. Federal Reserve (Fed), and thus did not help prevent the market's downturn on this day.

While non-farm payrolls in the U.S. increased by 119,000 in September, exceeding market expectations, the unemployment rate rose to 4.4%, continuing concerns about the weakening labor market.

Meanwhile, Walmart, a major U.S. retailer and a component of the Dow Jones Industrial Average, surged 6.46% on this day following its strong earnings report, contributing to a reduction in the Dow's decline.

Thomas Martin, Senior Portfolio Manager at Globalt Investments, said, "There was a lot of anticipation built up around Nvidia, and Nvidia delivered good results. However, many questions remain regarding inflation, employment, Fed policy, and tariffs."

He added, "Investors have not finished selling. The market is in a correction, and this is a typical pattern for a correction process."

Following the release of the employment report, financial markets slightly increased their expectations for a December Fed rate cut, but expectations for a freeze remained dominant.

According to the CME FedWatch tool, the futures market reflected a 40% probability of the Fed cutting interest rates by 0.25 percentage points at the Federal Open Market Committee (FOMC) meeting on December 9-10, up from 30% the previous day. However, the probability of a freeze remained high at 60%.

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