US close: Stocks retreat despite Nvidia beat as Fed outlook weighs
By Iain Gilbert
Date: Thursday 20 Nov 2025
(Sharecast News) - Major indices closed lower on Thursday after a dramatic turnaround in shares of artificial intelligence darling Nvidia as market participants gave up hope that the central bank would move to cut rates again in December.
At the close, the Dow Jones Industrial Average was down 0.84% at 45,752.26, while the S&P 500 shed 1.56% to 6,538.76 and the Nasdaq Composite saw out the session 2.15% weaker at 22,078.05.
The Dow closed 386.51 points lower on Thursday, more than reversing modest gains recorded in the previous session as the blue-chip index partially bounced back from a four-day losing streak.
Nvidia posted stronger-than-expected third-quarter results after the close on Wednesday, easing investor concerns over the sustainability of AI-driven demand as it lifted its full-year outlook. The chipmaker reported Q3 revenues of $57.01bn, up 62% year-on-year and ahead of consensus estimates, while adjusted earnings came in at $1.30 per share, beating forecasts of $1.25, and net income surged 65% to $31.91bn. Nvidia also projected Q4 revenues of roughly $65bn, well above analyst expectations of $61.66bn.
However, Nvidia later gave back earlier gains and dragged the broader market down as the stock ultimately closed 3% lower, despite chief executive Jensen Huang's reassurance that demand for its current-generation Blackwell chips were "off the charts" and his rejection of the idea of an AI bubble.
In terms of Thursday's corporate news, retail giant Walmart reported strong growth in third-quarter revenue and adjusted operating income, leaving the company to raise its full-year outlook for growth in net sales to 4.8% to 5.1% and adjusted operating income to 4.8% to 5.5% as eCommerce was a bright spot again.
On the macro front, US non-farm payrolls increased by 119,000 in September, according to the Bureau of Labor Statistics, following August's revised 4,000 decline and well and truly ahead of forecasts of 50,000 for the biggest job gain in five months, but also revealed downward revisions to both July and August's prints.
The increase was driven by gains in healthcare, hospitality and social assistance, while declines were seen in transportation, warehousing and federal government roles. The September jobs report, originally due on 3 October, was delayed by the longest federal government shutdown in US history. Also of note, the unemployment rate edged higher to 4.4%, up from 4.3% for the highest level seen since October 2021.
September's payrolls report also included revisions for both July and August, pointing to weaker job growth over the summer, with July's figure lowered by 7,000 to 72,000 and August revised down by 26,000 to a decline of 4,000, according to the latest update. The combined downward revision of 33,000 reflected additional data from businesses and government agencies, as well as updated seasonal adjustments, the Bureau of Labor Statistics said.
Elsewhere, Americans lined up for unemployment benefits at a decelerated pace last week, according to fresh data from the Department of Labor. Initial jobless claims fell by 8,000 to a seasonally adjusted 220,000 in the week ended 15 November, slightly better than consensus forecasts for a smaller drop to 223,000, while continuing claims, which track those still receiving benefits, increased to 1.974m, up from the 1.957m expected by economists for the highest level for insured unemployment since November 2021. The four-week moving average, which aims to strip out week-to-week volatility, came to 224,250, down by 3,000 from the previous week's print. The unemployment rate held steady at 1.3%.
On another note, manufacturing activity in the mid-Atlantic region improved in November, according to the Philadelphia Federal Reserve, though the sector remained in contraction. The headline index rose 11 points to -1.7, beating expectations for a reading of -3.1 and recovering from October's sharp drop. Demand indicators weakened, with new orders plunging to -8.6 for the lowest since April, while shipments turning negative for the first time since May. Employment edged higher, while the average workweek softened. Price pressures persisted, with input costs rising and output prices easing but still above average.
Still on data, existing home sales in the US rose to their highest in eight months in October, following two straight monthly gains, according to the National Association of Realtors. The number of existing home sales - a widely followed key economic indicator that tracks the current housing stock excluding newly built homes - rose 1.2% over the month to an annualised rate of 4.10m, the highest number of sales since February, when sales surged to 4.27m. October's figures followed a downwardly revised 1.3% gain in September, marking the third increase over the past four months. Compared with October 2024, sales were up 1.7%.
Finally, the Kansas Fed's manufacturing activity index climbed from 15 in October to 18 in November, the highest reading since April 2022, pointing to a notable pickup in manufacturing expansion. Factory activity saw modest gains in both the durable and nondurable sectors.
Minutes from the Federal Reserve's October meeting were also in focus on Thursday, released on Wednesday afternoon, they revealed officials were divided over the relative risks posed by inflation and a cooling labour market. While the Federal Open Market Committee approved a second consecutive quarter-point rate cut, the outlook for December remains uncertain, with many participants opposing further reductions this year.
Traders have scaled back expectations for another cut at its 10 December meeting, with futures markets now pricing in a roughly 33% chance of a 25 basis point reduction, down sharply from a month earlier.
Reporting by Iain Gilbert at Sharecast.com
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