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A number of stocks fell in the afternoon session after markets faded the Nvidia rally in the morning session, as investors remained uncertain about future rate cuts.
While the trading day began with significant enthusiasm, pushing the Dow Jones Industrial Average up more than 700 points and the Nasdaq Composite up 2.6%, momentum quickly evaporated as the session wore on. The primary catalyst for this sharp reversal was a stronger-than-expected jobs report, which reduced the implied odds of a December interest rate cut to less than 40%. This macroeconomic anxiety overshadowed stellar corporate performance. Nvidia initially surged 5% on blockbuster earnings and CEO Jensen Huang's bullish outlook on "off the charts" demand for Blackwell chips. However, the stock eventually turned negative, acting as a heavy weight that dragged the broader indices into the red. The sell-off partly reflects a deepening caution regarding high-flying tech valuations in a "higher-for-longer" rate environment.
Consequently, investors appeared to rotate capital away from volatile growth sectors and toward defensive staples, evidenced by Walmart's 6% gain following its own earnings beat. Ultimately, the market could not sustain the morning's euphoria, as traders prioritized rate realities over AI potential.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
Datadog’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 14 days ago when the stock gained 21.1% on the news that the company reported third-quarter financial results that surpassed Wall Street's expectations and provided an optimistic outlook for the future.
The monitoring and security platform posted revenue of $885.7 million, a 28.4% increase from the same period last year, and delivered an adjusted earnings per share of $0.55, both of which beat analyst estimates. The company also reported adding 210 new large customers, those spending over $100,000 annually, bringing the total to 4,060. Looking ahead, Datadog issued fourth-quarter revenue guidance that was above market expectations and also raised its financial forecast for full-year earnings. This combination of a strong quarterly performance and a confident outlook fueled positive investor sentiment.
Datadog is up 10.7% since the beginning of the year, but at $158.97 per share, it is still trading 20.4% below its 52-week high of $199.72 from November 2025. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,784.
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