Stocks Reverse Course as Nvidia Earnings Rally Fades, VIX Spikes

The S&P 500 Index ($SPX) (SPY) today is off by -0.19%, the Dow Jones Industrials Index ($DOWI) (DIA) is down by -0.21%, and the Nasdaq 100 Index ($IUXX) (QQQ) is lower by -0.49%.  December E-mini S&P futures (ESZ25) are down -0.43%, and December E-mini Nasdaq futures (NQZ25) are off -0.69%.

US stock indexes opened sharply higher today after Nvidia's robust revenue forecast eased valuation concerns and dispelled fears of a potential bubble in the artificial intelligence industry. However, benchmark indices are following Nvidia into the red this afternoon as the AI chip giant erases its intraday gains to trade lower.  

Elsewhere, Walmart is up by more than +5% after its strong Q3 results showed consumer spending continues to hold up.

Bond yields whipsawed lower following Sep nonfarm payrolls that rose more than expected, while the Sep unemployment rate unexpectedly ticked up to a 4-year high, which bolstered expectations that the Fed may still cut interest rates at next month’s FOMC meeting.  The chance of a rate cut at the December 9-10 FOMC meeting rose to 39.6% today from 30.1% on Wednesday, according to the CME FedWatch Tool, but the odds have declined sharply from 50% a week ago and 98.8% a month ago.

The Cboe Volatility Index ($VIX) is spiking, up 19% intraday to reach its highest point since Oct. 17.

US weekly initial unemployment claims fell by -8,000 to 220,000, showing a stronger labor market than expectations of 227,000.  However, weekly continuing claims rose to 1.974 million, the most in four years, and a sign that those currently unemployed are finding it challenging to secure new employment. 

US Sep nonfarm payrolls rose by +119,00 beating expectations of +51,000 and signaling a stronger labor market000.  The Sep unemployment rate unexpectedly rose by +0.1 to a nearly four-year high of 4.4%, showing a weaker labor market than expectations of no change at 4.3%.

US Sep average hourly earnings remained unchanged from Aug at +3.8% y/y, stronger than expectations of +3.7% y/y. 

The US Nov Philadelphia Fed business outlook survey rose +11.1 to -1.7, weaker than expectations of +1.0.

US Oct existing home sales rose +1.2% m/m to an 8-month high of 4.10 million, stronger than expectations of 4.08 million.

Hawkish comments today from Cleveland Fed President Beth Hammack were bearish for stocks, as she said, "Lowering interest rates to support the labor market risks prolonging this period of elevated inflation, and it could also encourage risk-taking in financial markets."

This week’s US economic schedule is very heavy as a deluge of delayed economic reports will be released.  Friday brings real earnings, the S&P US manufacturing and services PMI reports, the University of Michigan’s US consumer sentiment index, and the Kansas City Fed’s services activity report.  The Bureau of Labor Statistics said today that it will not publish an October employment report and noted it will incorporate those payroll figures into the November report set to be published on December 16.  Other delayed US economic reports are also expected to be released in the coming days, but have not yet been scheduled.

Q3 corporate earnings season is drawing to a close as 460 of the 500 S&P companies have released results.  According to Bloomberg Intelligence, 82% of reporting S&P 500 companies exceeded forecasts, on course for the best quarter since 2021.  Q3 earnings rose +14.6%, more than doubling expectations of +7.2% y/y. 

Overseas stock markets are mixed today.  The Euro Stoxx 50 is up +1.42%.  China’s Shanghai Composite closed down -0.40%.  Japan’s Nikkei Stock 225 closed up sharply by +2.65%.

Interest Rates

December 10-year T-notes (ZNZ5) today are up by +4 ticks.  The 10-year T-note yield is down -1.9 bp to 4.117%.  T-note prices recovered from a 2-week low today and whipsawed higher after Sep nonfarm payrolls rose more than expected, but the Sep unemployment rate unexpectedly ticked up to a nearly 4-year high, which bolsters speculation the Fed may still cut interest rates at next month’s FOMC meeting.  T-notes also garnered support from easing inflation expectations, as the 10-year breakeven inflation rate dropped to a 4-week low today at 2.267%. 

Gains in T-notes are limited after Oct existing home sales rose more than expected to an 8-month high, and after Cleveland Fed President Beth Hammack said she is against further Fed interest rate cuts. 

European government bond yields are mixed today.  The 10-year German bund yield rose to a 6-week high of 2.742% and is up +1.8 bp to 2.730%.  The 10-year UK gilt yield fell from a 5-week high of 4.619% and is down -0.7 bp at 4.595%.

The Eurozone Nov consumer confidence index was unchanged at -14.2, weaker than expectations of an increase to -14.0.

German Oct PPI fell -1.8% y/y, weaker than expectations of -1.7% y/y.

ECB Governing Council member Makhlouf said Eurozone interest rates are in a "good place" and that he'd "need to see pretty compelling evidence to move."

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on December 18.

US Stock Movers

Nvidia (NVDA) is down more than 2%, erasing earlier gains, after reporting Q3 revenue of $57.01 billion, above the consensus of $55.19 billion, and forecasting Q4 revenue of $65 billion plus or minus 2%, stronger than the consensus of $62 billion.  Also, Tesla (TSLA), Apple (AAPL), and Alphabet (GOOGL) are narrowly positive, while Meta Platforms (META) and Amazon.com (AMZN) have fallen into the red along with Microsoft (MSFT), down more than 1%.

Semiconductor and AI-infrastructure stocks were all climbing early due to Nvidia’s robust earnings forecast, but have likewise since turned lower.  Broadcom (AVGO) is just barely positive, while ARM Holdings Plc (ARM), Intel (INTC), and Marvell Technology (MRVL) are all in the red at last check.  In addition, KLA Corp (KLAC), GlobalFoundries (GFS), and Lam Research (LRCX) are trading down, and Advanced Micro Devices (AMD) has plummeted about 5%, while Applied Materials (AMAT) and Qualcomm (QCOM) are also in the red. 

PACS Group (PACS) is up more than +56% after it said its restatements and audit committee investigation are now complete.  It also reported Q3 revenue of $1.34 billion, up +31% from a year ago. 

Walmart (WMT) is up more than +5% to lead gainers in the Dow Jones Industrials after boosting its 2026 net sales forecast at constant currencies to +4.8% to +5.1% from a previous forecast of +3.75% to 4.75%. 

Regeneron Pharmaceuticals (REGN) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after the FDA approved the company’s EYLEA HD, an injectable drug to treat patients with macular edema following retinal vein occlusion. 

Nasdaq Inc. (NDAQ) is up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $110. 

Jack Henry & Associates (JKHY) is up more than +1% after Raymond James double-upgraded the stock to strong buy from market perform with a price target of $198.

Bath & Body Works Inc. (BBWI) is down more than -25% after reporting Q3 net sales of $1.59 billion, below the consensus of $1.63 billion, and cutting its full-year EPS estimate to $2.83 from a previous estimate of $3.28-$3.53, well below the consensus of $3.44. 

Jacobs Solutions (J) is down more than -8% to lead losers in the S&P 500 after reporting Q3 revenue of $3.15 billion, below the consensus of $3.16 billion.

Datadog (DDOG) is down more than -7% to lead losers in the Nasdaq 100 after analysts said Palo Alto Networks’ purchase of Chronosphere is a competitive risk for the company. 

Palo Alto Networks (PANW) is down more than -6% after announcing it had acquired Chronosphere Inc. for $3.35 billion. 

Abbot Laboratories (ABT) is down more than -1%  after buying Exact Sciences for $21 billion, or $105 per share.

Earnings Reports(11/20/2025)

Bath & Body Works Inc (BBWI), Copart Inc (CPRT), Elastic NV (ESTC), Gap Inc/The (GAP), Intuit Inc (INTU), Jacobs Solutions Inc (J), Post Holdings Inc (POST), Ross Stores Inc (ROST), UGI Corp (UGI), Veeva Systems Inc (VEEV), Walmart Inc (WMT).