SPY ETF Falls 1.5% as U.S. Stocks Slide After Strong Jobs Data- In a sudden and sharp reversal, U.S. markets closed Thursday deep in negative territory, sending shockwaves across risk assets and stoking renewed anxiety among investors. The S&P 500 ETF (SPY) fell 1.52%, while the Nasdaq 100 ETF (QQQ) slid 2.37%, reversing gains seen earlier in the session despite strong corporate earnings.
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Nvidia Earnings Provide Initial Lift
The session had initially been buoyed by Nvidia’s (NVDA) strong quarterly performance, which lifted sentiment in tech-heavy indices. However, the market’s optimism proved fleeting as broader macroeconomic indicators and influential market commentary quickly redirected investor sentiment.
Jobs Report Highlights Fragile Labor Market
Adding to the pressure, the Bureau of Labor Statistics’ (BLS) September jobs report revealed mixed signals about the U.S. labor market. Nonfarm payrolls rose by 119,000, well above the estimated 50,000, but this positive surprise was offset by a downward revision to August’s numbers, which now show a loss of 4,000 jobs instead of the previously reported 22,000 additions.
Meanwhile, the unemployment rate ticked up to 4.4%, marking its highest level since October 2021. Heather Long, Chief Economist at Navy Federal Credit Union, summarized the trend:
“Bottom line: The economy added an average of 44k jobs a month for the past 4 months. That’s barely ‘treading water’ and explains why unemployment is now 4.4% – highest since Oct 2021.”
These mixed data points underscore a labor market that remains fragile, with growth just enough to maintain current levels rather than driving robust economic expansion.
Dalio Flags Bubble Risks
Adding fuel to market unease, Bridgewater founder Ray Dalio described current market conditions as “definitely in a bubble” during an appearance on CNBC’s Squawk Box. Dalio defined a bubble as “an unsustained amount of buying” coupled with “unsustained valuations”, and suggested that today’s environment is 80% of the way to the extremes seen in the 1929 and 2000 bubbles.
Despite highlighting these risks, Dalio advised investors not to panic sell, noting that while there’s no immediate catalyst for a market crash, historical triggers have included tightening monetary policy, wealth taxes, and liquidity needs. He recommended gold (XAUUSD) as a safe-haven asset for portfolio protection amid elevated market valuations.
“Don’t sell just because there’s a bubble. But if you look at the correlations with the next 10 years’ returns, when you are in that territory, you get very low returns,” Dalio cautioned.
Fed Governor Warns of Potential Price Declines
Market sentiment was further pressured by comments from Federal Reserve Governor Lisa Cook, who warned of an “increased likelihood of outsized asset price declines” across stocks, bonds, leveraged loans, and housing markets due to elevated valuations. Despite her caution, Cook reassured investors that the financial system is resilient enough to withstand such events without systemic collapse.
Broader Market Impacts
The combination of mixed jobs data, tech earnings volatility, and high-level warnings drove a sharp reversal in equities. By the close, the S&P 500 (SPX) recorded a 1.56% loss, while the Nasdaq 100 (NDX) dropped 2.38%. Investors now face uncertainty about the sustainability of recent rallies, particularly in technology and high-growth sectors, as macroeconomic and policy risks continue to dominate sentiment.
What This Means for Crypto and Risk Assets
While the report focuses on U.S. equities, these developments have significant implications for risk assets, including cryptocurrencies. Historically, crypto markets correlate with broader equity volatility, meaning that sudden sell-offs in tech-heavy ETFs can ripple into BTC, ETH, and altcoins. Combined with elevated market valuations and bubble warnings, traders may brace for heightened volatility and short-term corrections in digital assets as global risk sentiment recalibrates.
Investors will be watching upcoming economic data, Federal Reserve commentary, and corporate earnings closely. Key signals include labor market trends, inflation readings, and liquidity conditions, which will guide market positioning in the near term. With cautionary voices like Dalio and Fed officials highlighting potential overvaluation, risk assets remain in a delicate balance, where sentiment-driven moves could dictate price action more than fundamentals.
