What Happened?

A number of stocks fell in the afternoon session after markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts. 

While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment. 

Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Design Software company Unity (NYSE: U) fell 2.7%. Is now the time to buy Unity? Access our full analysis report here, it’s free for active Edge members.
• E-commerce Software company Wix (NASDAQ: WIX) fell 3%. Is now the time to buy Wix? Access our full analysis report here, it’s free for active Edge members.
• Lending Software company Upstart (NASDAQ: UPST) fell 3.1%. Is now the time to buy Upstart? Access our full analysis report here, it’s free for active Edge members.
• Data Analytics company Samsara (NYSE: IOT) fell 2.9%. Is now the time to buy Samsara? Access our full analysis report here, it’s free for active Edge members.
• Data Analytics company Health Catalyst (NASDAQ: HCAT) fell 2.6%. Is now the time to buy Health Catalyst? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Upstart (UPST)

Upstart’s shares are extremely volatile and have had 76 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 3 days ago when the stock dropped 4.9% on the news that investor concerns grew over a weakening credit environment that affected the broader fintech sector. 

The negative sentiment was fueled by several factors, including reports of larger-than-expected loan losses from some regional banks and a rise in auto delinquencies. Furthermore, consumer sentiment had plunged, and signs pointed to a weakening labor market in recent months. This environment created worries for lending-focused companies like Upstart. The stock's decline also followed a previous drop after the company's recent earnings report, where its fourth-quarter revenue guidance of $288 million came in below the consensus estimate of $303.7 million, adding to investor apprehension.

Upstart is down 41.7% since the beginning of the year, and at $35.47 per share, it is trading 60% below its 52-week high of $88.77 from February 2025. Investors who bought $1,000 worth of Upstart’s shares at the IPO in December 2020 would now be looking at an investment worth $1,203.

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