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:

• Social Networking company Reddit (NYSE: RDDT) fell 2.8%. Is now the time to buy Reddit? Access our full analysis report here, it’s free for active Edge members.
• Social Networking company Pinterest (NYSE: PINS) fell 2.8%. Is now the time to buy Pinterest? Access our full analysis report here, it’s free for active Edge members.
• Online Retail company Chewy (NYSE: CHWY) fell 2.8%. Is now the time to buy Chewy? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Pinterest (PINS)

Pinterest’s shares are quite volatile and have had 18 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 24 days ago when the stock gained 3.9% on the news that optimism surged over a potential trade truce between the U.S. and China. 

Reports of progress in trade negotiations ahead of a scheduled meeting between the two nations' presidents fueled investor confidence. An agreement would likely ease trade tensions and reduce or remove tariffs that have created economic uncertainty and higher costs for many multinational corporations. Also, optimism improved on expectations that the Federal Reserve will cut interest rates later in the week, especially after recent data showed inflation wasn't heating up as much as expected. Simply put, good news on trade, and the promise of lower borrowing costs created a powerful rally.

Pinterest is down 19% since the beginning of the year, and at $24.78 per share, it is trading 38% below its 52-week high of $40 from February 2025. Investors who bought $1,000 worth of Pinterest’s shares 5 years ago would now be looking at an investment worth $370.68.

The 1999 book Gorilla Game predicted Microsoft and Apple would dominate tech before it happened. Its thesis? Identify the platform winners early. Today, enterprise software companies embedding generative AI are becoming the new gorillas. Click here for access to our special report that reveals one profitable leader already riding this wave.