Markets Diverge as Tech Sells Off and Jobs Data Softens
US stocks opened mixed Wednesday, with the Dow Jones rising 0.4% and the S&P 500 adding 0.1%, while the Nasdaq flipped flat after early gains as renewed doubts over AI demand hit big tech.
Microsoft fell more than 2% after reports that the company is lowering AI-related sales quotas — a headline that reignited investor skepticism around near-term enterprise AI spending. Semiconductor names Nvidia, Broadcom, and TSMC also slipped roughly 1%.
The broader market found support from a surprisingly weak ADP report, which showed private employers cut 32,000 jobs in November — a sharp contrast to expectations for modest hiring. Small businesses were responsible for most of the decline, according to ADP.
The softer labor trend strengthened expectations of a Federal Reserve rate cut next week, with bond markets now heavily priced for a December move.
Macro Watch: Services Data, Inflation Incoming
Traders are also waiting for private-sector November services data as an early read on inflation momentum.
The more consequential update — the PCE inflation report — arrives Friday, offering a belated look at September consumer spending.
Bitcoin Breaks Above $92,000 as Sentiment Improves
Bitcoin extended its comeback from a multiweek selloff, briefly topping $93,000 before paring gains. A combination of tailwinds boosted sentiment:
- Vanguard’s move to offer crypto products
- Bank of America recommending up to 4% crypto allocation
- A major Ethereum network upgrade
Analysts say a potential “Santa rally” is still in play, even after an 18% drop in November and heavy ETF outflows.
Small Caps Rally as the “January Effect” Starts Early
Small caps outperformed Wednesday, with the Russell 2000 rising more than 1%, beating all major indexes.
Market historians point to seasonal factors: small caps tend to outperform from mid-December through March, especially during dovish policy cycles.
Lower rates historically act as a strong catalyst for the group.
Nvidia Highlights AI Efficiency Breakthrough
Nvidia released new data showcasing how its Blackwell AI systems scale frontier AI models more efficiently — a relevant theme as Big Tech faces power constraints across data center buildouts.
A key trend Nvidia emphasized: modern frontier models increasingly rely on Mixture of Experts (MoE) architecture, which activates only a subset of specialized AI “experts” per query.
This dramatically reduces compute needs but requires advanced networking and huge memory capacity.
Nvidia says its GB200 NVL72 racks (72 Blackwell GPUs) remove major MoE bottlenecks — improving energy efficiency and lowering AI training costs.
According to Nvidia, Blackwell is “transforming the economics of AI in power- and cost-constrained data centers.”
WSA Take
Tech remains the most rate-sensitive corner of the market — and while long-term AI demand is intact, near-term spending looks uneven as enterprises re-evaluate ROI in a high-cost compute environment. The bigger macro story today is the labor market: weakness in ADP continues to tilt the path toward a December rate cut.
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