The Dow Jones Industrial Average fell 750 points on Monday, dipping below 47,000. This decline is due to ongoing worries and unresolved issues from last week. The AI sector is facing new challenges, while there is hope that restarting official data might lead the Federal Reserve to consider its third interest rate cut in December. Alphabet’s shares rose over 3% after Berkshire Hathaway invested $4.3 billion in the company. At the same time, Berkshire has reduced its holdings in Apple, though it still holds $60.7 billion in shares.

The AI Industry Concerns

The AI industry is feeling the pressure, with Nvidia shares dropping 1.8% on Monday. Nvidia will announce its latest quarterly results on Wednesday, and there are worries about whether demand for AI computing power will match its revenue. The short-term funding resolution passed by the US government aims to restart federal operations. Market participants are now looking at upcoming labor and inflation data. However, it remains uncertain if September’s jobs report will be enough for a rate cut. Nvidia leads the GPU market, powering industries like AI and supercomputing. Its H100 chip has six times the capacity of its predecessor. The company’s market cap reached $3 trillion by June 2024, fueled by optimism about its technological advancements. With the Dow falling below 47,000, market anxiety is rising. The VIX volatility index shot up past 22, the highest level since the government shutdown began in September 2025. This uncertainty is closely tied to the Federal Reserve’s next action, suggesting traders should consider buying protective puts on broad market ETFs like SPY or DIA. The market is anxious for economic data that might support the desired rate cut.

Nvidia Earnings And Market Impact

Nvidia’s upcoming earnings announcement on Wednesday is a significant event. Options pricing this week suggests a potential 10% move in the stock. With the stock already under pressure due to concerns about making money from AI, traders are preparing for a big shift by using strategies like straddles or strangles. These strategies allow traders to profit from large price swings, no matter the direction. The tension around Nvidia mirrors the market’s reaction after their second-quarter earnings in August 2025. Back then, a small miss on future guidance led to a sharp drop in the stock in a single day. This incident showed how sensitive Nvidia is to any indication that AI revenue growth might be slowing. Traders appear to be using that recent experience as a guide for this week’s earnings report. Berkshire Hathaway’s shift, buying Google and selling Apple, suggests a potential rotation among major tech stocks. Traders are reacting by setting up pairs trades, such as buying GOOG call options while also purchasing AAPL put options. This strategy anticipates Google will outperform Apple, as GOOG has gained nearly 8% more than AAPL over the past quarter. In summary, the market’s direction depends on the likelihood of a rate cut on December 10. The CME FedWatch Tool shows traders now estimating only a 45% chance of this, down from almost 70% a few weeks ago. The release of the delayed September Nonfarm Payrolls report will be the next major factor that could shift these odds. A weaker-than-expected report might boost markets and reinforce cut bets, while a strong report could lead to another significant sell-off. Create your live VT Markets account and start trading now.

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