The stock market may be entering a correction, economist and analyst Ed Yardeni, Yardeni Research president, suggested Thursday.
"The stock market pullback that we expected at the start of this month may be turning into an outright correction, especially for the Nasdaq," he wrote in his newsletter sent after market hours. "The S&P 500 is down 5.1% from its October 29 record high. The Nasdaq is down 7.8% over this period. Both fell below their 50-day moving averages today. We doubt that either will fall to their 200-day moving averages, currently at 6,157.70 and 20,158.34."
Thursday wasn't a great day in the market despite AI chipmaker Nvidia posting better-than-expected third-quarter financial results after the close the previous day, Yardeni noted.
"Good news bears were on the loose today. It was a risk-off day in financial markets despite strong earnings and economic news," he wrote. "This morning, we learned that payroll employment rose more than expected in September and that initial unemployment claims remained subdued last week. Nevertheless, it was a bad day for stock investors."
Nvidia's strong earnings report "didn't do much to resolve the known unknowns about AI spending," Yardeni said, noting widespread uncertainty about AI infrastructure spending's effect on AI data center companies' earnings.
Investors also are unnerved by recent reports that Softbank and Thiel Macro sold all their Nvidia shares, and hedge fund manager Michael Burry has been raising doubts about major AI companies' accounting practices, Yardeni noted.
The S&P 500 and Nasdaq were up less than 1% in Friday afternoon trading.
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