James Hardie rallied 6.2 per cent after the embattled building materials maker raised its full-year profit forecast citing steadying demand for home sidings and trims, just months after the company doubled down on US housing by buying home-decking provider Azek. The deal, struck without shareholder approval, had sparked a massive sell-off in James Hardie’s shares and led investors to oust chair Anne Lloyd last month. In a separate filing, the company said it appointed independent non-executive board member Nigel Stein as its new chair.
On Wall Street overnight, the S&P 500 fell 0.9 per cent and pulled further from its all-time high set late last month, ending a 10-week streak of winning Mondays. The Dow Jones dropped 557 points, or 1.2 per cent, and the Nasdaq composite sank 0.8 per cent.
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Nvidia was the heaviest weight on the US market, as it’s often been in its last couple of tumultuous weeks. The chip company fell 1.8 per cent, while losses for other AI winners included a 6.4 per cent slide for Super Micro Computer.
Other areas of the market that had been high-momentum winners also sank. Bitcoin fell below $US92,000, down from nearly $US125,000 last month, for example. That helped drag down Coinbase Global by 7.1 per cent and Robinhood Markets by 5.3 per cent.
Critics have been warning that the US stock market could be primed for a drop because of how high prices have shot since April, leaving them looking too expensive. Critics point in particular to stocks swept up in the AI mania, which have been surging at spectacular speeds for years. Even with Monday’s loss, Nvidia is still up 39 per cent for the year so far after it doubled in price in four of the last five years.
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That has Wall Street’s spotlight on Wednesday [Thursday morning AEDT], when Nvidia will report how much profit it made during the summer. AI stocks have surged as much as they have because of expectations that they’ll produce huge growth in profits. If they fail to top analysts’ expectations, that would undercut one of the big assumptions that’s driven the US stock market to records.
Such high expectations extend beyond tech stocks, even if they are toughest for AI darlings.
That helped offset a rise of 3.1 per cent for Alphabet. It jumped after Berkshire Hathaway said it built a $US4.9 billion ownership stake in Google’s parent company. Berkshire Hathaway, run by famed investor Warren Buffett, is notorious for trying to buy stocks only when they look like good values while avoiding anything that looks too expensive.
Another source of potential disappointment for Wall Street is what the Federal Reserve does with interest rates. The expectation had been that the Fed would keep cutting interest rates in hopes of shoring up the slowing job market. Wall Street loves lower rates because they can give a boost to the economy and to prices for investments.
But questions are rising about whether a third cut for the year will come out of the Fed’s next meeting in December, something that traders had earlier seen as very likely. The downside of lower interest rates is that they can make inflation worse, and inflation has stubbornly remained above the Fed’s 2 per cent target.
Fed officials have also pointed to the US government’s shutdown, which delayed the release of updates on the job market and other signals about the economy. With less information and less certainty about how things are going, some Fed officials have suggested it may be better to wait in December to get more clarity.
Now that the shutdown is over, the government is preparing to release September’s delayed jobs report on Thursday.
In 2026, the Fed is likely to cut interest rates only in response to a slowing economy instead of trying to cut ahead of it, according to Barry Bannister, chief equity strategist at Stifel. That’s not as good an environment for stock prices, and Bannister said the “Fed’s ‘free lunch’ is over.”
