We could still close the year with a rally despite AI slump

The Nasdaq Composite faced a decline of 0.84% on Monday, reflecting mounting pressure on technology stocks, with major players like Apple, Meta, and Oracle each falling by over 1%. Nvidia, a key player in the artificial intelligence sector, fared even worse, with its stock dropping nearly 2%. In a statement made earlier this month, CEO Jensen Huang highlighted that the chip manufacturer has amassed orders worth "half a trillion dollars" for the years 2025 and 2026. As Nvidia prepares to announce its third-quarter earnings on Wednesday, investors are keenly awaiting insights from Huang that could indicate robust growth for 2026, as suggested by the impressive order figures. However, any hint of disappointment in guidance could have serious repercussions for the stock. Investment strategist Ross Mayfield from Baird cautioned that "even slightly muted guidance or forecasts for demand could lead to negative market reactions." Despite the recent sell-off in the tech sector, driven by concerns over high valuations and capital expenditures, some analysts remain optimistic about a possible year-end rally. Michael Graham from Canaccord Genuity expressed a balanced outlook, stating that both bullish and bearish signals are present as the year draws to a close, yet he believes a year-end rally is probable. Max Kettner, HSBC's chief multi-asset strategist, echoed this sentiment, suggesting that the likelihood of a market surge—especially in equities—before year's end is significantly higher than the risk of an AI-related market bubble bursting. If their forecasts hold true, investors could find much to celebrate during the holiday season, leaving further concerns about AI for the new year. In other market news, major U.S. indexes saw declines on Monday, while Alphabet's shares increased following news of Berkshire Hathaway acquiring a stake in the company. In Asia-Pacific, markets mirrored Wall Street's downward trend on Tuesday. Additionally, Fed Governor Christopher Waller emphasized the importance of the labor market amid signs of weakening, while Vice Chair Philip Jefferson advised a cautious approach to monetary policy. Meanwhile, India's trade deficit for October reached a record $41.7 billion, driven by increasing gold imports and decreasing exports to the U.S. As the gold market continues to thrive, reports indicate that wealthy investors are now leasing their gold bars for returns, capitalizing on the current high prices and defying traditional perceptions of gold as a non-yielding asset.