More swings rock Wall Street, except stocks are jumping this time

That could signal he'll vote for another cut to rates in December. What the Fed does is critical for Wall Street because stock prices ran to records through last month in part because of expectations for a series of invigorating cuts.

Other Fed officials, though, have argued against a December cut given how high inflation remains. The uncertainty created by such sharp disagreement has triggered dramatic swings for markets, as has the other dominant question on Wall Street: whether prices shot too high for stocks linked to the artificial-intelligence boom, cryptocurrencies and other stars.

Those swings hit a crescendo on Thursday, when U.S. stocks initially surged after Nvidia seemed to tamp down worries about a potential AI bubble. But the market quickly dropped to a sharp loss for its biggest reversal since April, when President Donald Trump shocked markets with his “Liberation Day” tariffs.

Despite the strong profit report from Nvidia, whose chips are powering the move into AI, worries are still hanging around about the longer term. Will all those AI chips and data centers that Amazon, Meta Platforms and other companies are paying for actually turn into big profits and productivity? If not, some investors fear, all the investment won’t be worth it.

AI-linked stocks were still skittish on Friday, helping to drag the rest of the market with them. Nvidia went from an initial gain to a drop of 4.3% before bobbing up and down, for example. Amazon went from an early loss of 0.9% to a rise of 1.4%.

Bitcoin, meanwhile, briefly plunged below $81,000 before pulling back to $85,000. That’s down from nearly $125,000 last month and back to where it was in April, when markets were shaking because of Trump’s tariffs.

The vast majority of stocks on Wall Street rose despite such swings, with more than 90% of stocks in the S&P 500 climbing. Their movements often get drowned out by Nvidia and other Big Tech stocks, whose movements have much more effect on the S&P 500 because of their immense sizes.

“When the largest companies drive most of the losses, the market can look weaker than it really is,” said Brian Jacobsen, chief economist at Annex Wealth Management.

Several retailers helped lead the way. Gap jumped 9.4% after reporting a stronger profit for the latest quarter than analysts expected. CEO Richard Dickson said it saw strong sales trends at each of its Old Navy, Gap and Banana Republic brands.

Ross Stores rose 7.7% after it likewise delivered a better profit than expected. CEO Jim Conroy said it saw broad-based growth during the quarter and raised the company’s forecast for an important measure of sales during the holiday season.

Homebuilders were also strong on hopes that lower interest rates could make mortgages cheaper and give a kick to the housing market. D.R. Horton jumped 7.4%, PulteGroup gained 6.2% and Lennar rose 6.2%.

In the bond market, Treasury yields eased following Williams' speech. The yield on the 10-year Treasury fell to 4.08% from 4.10% late Thursday.

Traders are now betting on a nearly 70% probability of a December cut, up sharply from 39% a day before, according to data from CME Group.

Treasury yields edged further down after a report from the University of Michigan said U.S. consumers' expectations for inflation in the coming year and in the longer term aren't as bad as they were a month before. That could give the Fed more leeway to cut rates, because increasing expectations of inflation can lead to a vicious cycle that only worsens it.

In stock markets abroad, indexes were mixed in Europe after markets tumbled in Asia following Wall Street’s stunning reversal.

Japan’s Nikkei 225 fell 2.4%, and South Korea’s Kospi dropped 3.8% for two of the larger losses.

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AP Writers Teresa Cerojano and Matt Ott contributed.