“Occasional market drops are the price of the ticket for the ride,” said Brian Jacobsen, chief economist at Annex Wealth Management.
One way companies can tamp down criticism about too-high stock prices is to deliver solid growth in profits. That’s raising the stakes for Nvidia’s profit report coming Wednesday, when it will say how much it earned during the summer.
If it falls short of analysts’ expectations, more drops could be on the way. That would have a huge effect on the market because Nvidia has grown to become Wall Street’s largest stock by value. That gives Nvidia’s stock movements a bigger effect on the S&P 500 than any other’s, and it can almost single-handedly steer the index’s direction on any given day.
Another way for stock prices broadly to look less expensive is if interest rates fall. That’s because bonds paying less in interest can make investors willing to pay higher prices for stocks and other kinds of investments.
In the bond market, the yield on the 10-year Treasury rose to 4.15% from 4.11% late Thursday.
Bitcoin is one of the investments that can get a boost from lower interest rates. It briefly fell below $95,000 on Friday, back to where it was in May. It had been near $125,000 only in October.
In stock markets abroad, indexes tumbled across Europe and Asia. South Korea’s Kospi fell 3.8% for one of the world’s largest losses.
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AP Writer Teresa Cerojano contributed.
