Stock market today: Dow jumps over 500 points to record close, Nvidia's slide drags on Nasdaq

US equities closed mixed, with the Dow Jones Industrial Average achieving a record high driven by optimism over a potential government shutdown resolution, while the Nasdaq Composite declined. This tech sector weakness was primarily led by Nvidia, which fell after SoftBank divested its entire stake and AI infrastructure provider CoreWeave lowered its revenue forecast, fueling broader concerns about AI valuations. Despite these specific tech headwinds, overall earnings season data indicates a broadening of profit strength beyond just AI-centric companies, while FedEx and Paramount Skydance also announced positive corporate developments.

Analysis

US equities presented a mixed picture, with the blue-chip Dow Jones Industrial Average surging over 1.2% to a new all-time high, driven by strong optimism for an imminent end to the government shutdown. Conversely, the Nasdaq Composite declined 0.2%, primarily due to a significant rotation out of technology and AI-related stocks. This divergence highlights a market grappling with macro-economic optimism versus sector-specific concerns.

The AI sector experienced notable headwinds, with Nvidia (NVDA) shares dropping around 2.5% after SoftBank Group (SFTBY) divested its entire stake to fund its own AI investments. Further dampening sentiment, CoreWeave (CRWV), an Nvidia-backed AI infrastructure provider, trimmed its 2025 revenue forecast to $5.05-$5.15 billion from $5.15-$5.35 billion, citing data center delays, and its stock fell 15%. This, alongside TSMC's (TSM) slowest sales growth since February 2024, raised questions about the sustainability of current AI valuations and the circular nature of some AI dealmaking.

Despite tech sector weakness, broader market earnings demonstrate resilience, with 82% of S&P 500 companies beating estimates and overall profits growing 13.1% year-over-year, indicating a broadening recovery beyond concentrated tech. Positive corporate news included FedEx (FDX) jumping 5% on an improved profit outlook for the quarter, and Rivian (RIVN) climbing 5% after exceeding Q3 revenue expectations with $1.55 billion. However, geopolitical risks persist, with renewed doubts about the US-China tariff truce concerning rare-earth supplies, and ADP data suggesting a slowing labor market.

Key Decisions for Investors

• Investors should closely monitor the AI sector for signs of valuation re-calibration, particularly given SoftBank's divestment from Nvidia and CoreWeave's trimmed guidance, which highlight potential risks in the AI supply chain and business models.
• Consider diversifying portfolios beyond concentrated tech, as broader market earnings demonstrate robust growth with 82% of S&P 500 companies beating estimates and 13.1% year-over-year profit increase.
• Track the resolution of the US government shutdown for clarity on economic data and potential interest rate implications, while also assessing geopolitical risks such as US-China trade dynamics impacting critical resources like rare earths.