The S&P 500 and Nasdaq ended sharply lower on Thursday, weighed down by a slump in chipmaker Nvidia after its quarterly report failed to rekindle Wall Street’s AI rally, while investors focused on data pointing to a cooling U.S. economy. Canada’s main stock index was also lower, as escalating global trade tensions fueled risk-aversion, despite stronger-than-expected earnings from three of the country’s big-five banks.
Nvidia tumbled 8.5%, evaporating US$274 billion in stock market value, after the Silicon Valley company gave a weaker-than-expected quarterly forecast for gross margin that overshadowed an upbeat revenue outlook.
Chipmakers Broadcom dropped more than 7% and Advanced Micro Devices lost 5%, pulling the Philadelphia chip index down 6.1%.
The launch of low-cost artificial intelligence models from China’s DeepSeek in January has cooled Wall Street’s AI rally, while an analyst report this week suggesting Microsoft was scrapping some data center leases also raised concerns of AI overcapacity.
With Nvidia’s results and outlook failing to impress investors with high expectations, its stock has now fallen almost 20% from its record-high close on January 6.
“Nvidia’s earnings were good, but not like the blockbuster earnings that they’ve been delivering for a while,” said Scott Welch, chief investment officer at Certuity.
While tech stocks dipped, other parts of the U.S. market saw gains. The S&P energy index rose 0.5%, tracking a jump in crude prices after U.S. President Donald Trump canceled oil major Chevron’s license to operate in Venezuela.
Also weighing on investor sentiment, data showed U.S. jobless claims jumped more than expected in the previous week, while another report reiterated that economic growth slowed in the fourth quarter.
Thursday’s data follows reports over the past week that suggested the economy was stalling, fears of which have also put all three major U.S. indexes on track for monthly declines.
“We’re now seeing inflation fears give way to growth fears, and that, in turn, is causing stocks to go, at best, sideways, and potentially even down,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia.
The S&P 500 dropped 1.59% to end the session at 5,861.57 points.
The Nasdaq tumbled 2.78% to 18,544.42 points, while the Dow Jones Industrial Average declined 0.45% to 43,239.50 points. It was the Nasdaq’s deepest one-day percentage drop in a month.
The S&P/TSX composite index ended down 200.12 points, or 0.8%, at 25,128.24, wiping out its gains over the previous three days and posting its lowest closing level since Jan. 17. For the month, the TSX was down 1.6%.
“Markets are going to be in very uncertain territory for some time here,” said Michael Sprung, president at Sprung Investment Management. “The main thing causing confusion is the worry over tariffs, particularly with respect to Canada and Mexico, but now also with the threatened tariffs on the European Union as well.”
Trump said that his proposed 25% tariffs on Mexican and Canadian goods will go into effect on March 4 and threatened an extra 10% duty on Chinese imports because deadly drugs are still pouring into the U.S. from those countries.
On Wednesday, Trump also floated a 25% “reciprocal” tariff on European cars and other goods.
The materials group in Toronto lost 2.1% as a stronger U.S. dollar weighed on gold prices.
Royal Bank of Canada, TD Bank and Canadian Imperial Bank of Commerce reported quarterly profit that beat analyst expectations. Shares of heavily weighted RBC fell 3.6%, TD was up 0.7% and CIBC ended 0.4% lower.
The financials sector fell 0.7% and technology ended 1.2% lower.
Energy was the only one of ten major sectors to end higher, adding 0.1%, as the price of oil settled up 2.5% at US$70.35 a barrel on supply concerns.
Shares of Veren Inc rose 9.4% after the oil producer reported better-than-expected quarterly results.
Superior Plus shares ended 11.5% higher. The utilities provider exceeded quarterly revenue estimates.
Investors are now focused on monthly Personal Consumption Expenditure data, which is the Federal Reserve’s preferred inflation gauge, due on Friday. Canada will also release fourth-quarter GDP data on Friday.
Traders expect both the Fed and the Bank of Canada to cut interest rates by at least 50 basis points by December, according to LSEG money market data Thursday.
Among U.S. stocks, Salesforce dropped 4% after the business software seller forecast fiscal 2026 revenue below expectations.
Snowflake surged 4.5% after the data analytics provider forecast fiscal 2026 product revenue above estimates.
Viatris plummeted 15% after the drugmaker forecast downbeat annual results.
Warner Bros Discovery jumped 4.8% after saying it expects streaming profits to double this year.
Volume on U.S. exchanges was heavy, with 15.8 billion shares traded, compared to an average of 15.3 billion shares over the previous 20 sessions.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.7-to-one ratio. The S&P 500 posted 20 new highs and 13 new lows; the Nasdaq recorded 42 new highs and 269 new lows.
Reuters, Globe staff