Nvidia swings and misses

Making sense of the forces driving global markets

By Jamie McGeever, Reuters Open Interest Markets Columnist 

A heavy selloff in tech stocks pushed the S&P 500 and Nasdaq lower on Thursday after investors' initial positive reaction to AI chipmaker Nvidia's results was replaced by doubt and pessimism, while safe-haven assets gold and Treasuries rose. 

More on that below. In my column today I look at the blistering rally in emerging market equities this year, led by South Korea's astonishing 50% surge, and ponder when the pause or correction comes. There's no way it can continue at this pace, can it?

I'd love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social. 

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* Tech's sentiment seesaw in full swing

Nvidia shares spiked 4% in after-hours trade on Wednesday immediately after Q4 results showed a solid sales beat and forecast-busting outlook. But that's evidently not enough, and shares sank 5.5% on Thursday, the biggest fall since April and wiping $260 billion off the company's value. 

The last 24 hours show how skittish the market is around AI and whether its disruptive force will be for good or ill. More pressing, will AI deliver the returns investors expect from the huge capex underway across the sector? Views on that seem to change from day to day.

* Summer Fed cut hopes fade

As debate swirls around Fed Chair nominee Kevin Warsh's dovish or hawkish tendencies, recent moves in interest rate futures markets bear watching - the next fully-priced quarter percentage point rate cut is being pushed back to September.

Presuming Warsh is confirmed by lawmakers and succeeds Jerome Powell in May as planned, that implies the Fed won't be easing until his third policy meeting as Chair. With core PCE inflation at 3%, this pause seems reasonable. President Trump, looking to November's potentially tricky mid-term elections, might not be so understanding.
 

* U.S. mortgage 'relief'

Any frustration Trump may feel about sticky interest rates could be offset by more encouraging signals from the housing market - average 30-year mortgage rates are now below 6% for the first time since September 2022.

Psychologically, the break into 5% territory could be significant for would-be home owners, and if sustained, could help ease the affordability crisis ahead of the mid-term elections. That said, borrowing to buy a house is still expensive - some 70% of all existing mortgages are at rates below 5%. 

The 50% surge in South Korean stocks in the first two months of 2026 is grabbing headlines, but other emerging markets are also boasting double-digit gains. Even the most ardent EM bull must be wondering if this blistering rally can continue. 

The likelihood of a near-term pause or correction is rising, and not just in South Korea. On the other hand, the upward momentum is strong. What's more, despite the comprehensive outperformance over U.S. and other developed markets, emerging equities are still cheap on a relative and historical basis, by some measures. 

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