Financial Markets                      11/14 09:40

   

   NEW YORK (AP) -- The U.S. stock market continues to shake on Friday, a day 
after one of its worst drops since its springtime sell-off, as Nvidia, bitcoin, 
gold and other high flyers on Wall Street swing.

   The S&P 500 fell 0.5% after paring a loss that reached 1.3% shortly after 
the start of trading. The Dow Jones Industrial Average was down 485 points, or 
1%, as of 10 a.m. Eastern time, while the Nasdaq composite was 0.4% lower.

   AI stocks once again were at the center of the action. Nvidia, which has 
become the poster child of the AI frenzy, went from an early loss of 3.4% to a 
modest gain of 0.1% and pulled the rest of the market in its wake.

   Critics have been warning that the U.S. stock market could be primed for a 
drop because of how high prices have shot since April, leaving them looking too 
expensive. They pointed in particular to stocks swept up in the mania around 
artificial-intelligence technology. Nvidia's stock has more than doubled in 
four of the last five years, for example.

   But even with the S&P 500's recent swings, the index that dictates the 
movements of many 401(k) accounts is still within 3% of its record set late 
last month.

   "Occasional market drops are the price of the ticket for the ride," said 
Brian Jacobsen, chief economist at Annex Wealth Management.

   Outside of tech, Walmart sank 1.5% after saying its CEO, Doug McMillon, will 
retire in January in a surprise move. He had helped the nation's largest 
retailer embrace technology more.

   One way companies can tamp down criticism about too-high stock prices is to 
deliver solid growth in profits. That's raising the stakes for Nvidia's profit 
report coming on Wednesday, when it will say how much it earned during the 
summer.

   If it falls short of analysts' lofty expectations, even more drops could be 
on the way. That would have a huge effect on the market because Nvidia has 
grown to become Wall Street's largest stock by value, briefly topping $5 
trillion. That gives Nvidia's stock movements a bigger effect on the S&P 500 
than any other's, and it can almost single-handedly steer the index's direction 
on any given day.

   Another way for stock prices broadly to look less expensive is if interest 
rates fall. That's because bonds paying less in interest can make investors 
willing to pay higher prices for stocks and other kinds of investments.

   Treasury yields had been falling for most of this year on expectations that 
the Federal Reserve would cut its main interest rate several times this year. 
And the Fed has indeed cut twice already in hopes of shoring up the slowing job 
market.

   But questions are rising now about whether a third cut, which traders had 
earlier seen as likely, will actually happen at the Fed's next meeting in 
December. The downside of lower interest rates is that they can make inflation 
worse, and inflation has been stubbornly remaining above the Fed's 2% target.

   Fed officials have pointed to the U.S. government's shutdown, which delayed 
the release of many updates on the job market and other signals about the 
economy. With less information and less certainty about how the economy is 
doing, some Fed officials have said it may be better to just wait in December 
to get more clarity.

   In the bond market, the yield on the 10-year Treasury held at 4.11%, where 
it was late Thursday.

   Bitcoin is one of the investments that can get a boost from lower interest 
rates. It briefly fell below $95,000 in the morning and is back to where it was 
in May. It had been near $125,000 only in October.

   The price of gold, meanwhile, sank nearly 3%. It shot to records throughout 
the year as investors looked for something that could protect from potentially 
high inflation and big debt loads built by the U.S. and other governments 
worldwide. But interest rates staying higher can hurt gold, which pays its 
investors nothing in interest or dividends.

   In stock markets abroad, indexes tumbled across Europe and Asia. South 
Korea's Kospi fell 3.8%, and London's FTSE 100 dropped 1.5% for two of the 
larger drops.

   ___

   AP Writer Teresa Cerojano contributed.

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