It was a sour day for the world stock market, as shares crudely fell across Asia, Europe, and the US on Wednesday. The reason behind this decline could be attributed largely to growing concern about the health of the global economy, with particular attention given to the United States as the world’s biggest economy.

The latest data showed that manufacturing activity in the US was still weak, while investors now looked ahead to forthcoming US jobs data set to be published on Friday. This, of course, is expected to feed into interest-rate expectations for the Federal Reserve’s decision next week.

Among the hardest-hit companies in this market slump is the chip-making giant Nvidia. Shares of Nvidia plunged nearly 10%, in a surprise to many who had high hopes for the company’s future in AI. Even with this drop, Nvidia’s stock is still double what it was a year ago, if not more-a testament to how high it has climbed in recent times.

The FTSE 100 – representing the biggest companies on the London Stock Exchange – was down by 0.55% at lunchtime. The fall was replicated across the continent too. Germany’s Dax retreated 1.41%, France’s Cac 40 nearly 1%, and Spain’s Ibex by 0.51% downwards. This was matched by comparable declines in the US, where the S&P 500 index closed Tuesday down more than 2% and the tech-heavy Nasdaq lost over 3%.

Why Did Nvidia Drop So Much?

Nvidia, listed on the Nasdaq, fell in value by 9.5%, knocking an incredible $279 billion (£212.9 billion) off its market value. This sudden drop in Nvidia’s share prices has left many investors scratching their heads. For a fact, Nvidia had been one of the shining stars in the technology market, especially after sudden interest in AI was sparked by the release of ChatGPT and similar tools. Despite the fall, Nvidia’s stock is still nine times higher than it was in November 2022.

What, then, can be inferred as the cause of this downward spiral? According to market predictors, this should be for a combination of reasons. First, there is this general feeling that perhaps all this hype about AI has been hyper-inflated. Swetha Ramachandran, a fund manager at Artemis Investment Management in London, termed the Nvidia slide “a matter of expectations catching up with reality.” She noted that Nvidia only recently reported a slower growth forecast: from its second-quarter surge of 122 percent growth, the company has dialed down to an 80 percent expected growth for the third quarter.

There were also reports that the US Department of Justice had issued a subpoena to Nvidia over potential anti-trust issues, which might have added to the market jitters. While the Department of Justice has not commented on this, any such investigation could create uncertainty as to Nvidia’s future.

What About Other Markets?

It wasn’t just Nvidia feeling the heat. Shares of its fellow tech giants, Alphabet, Apple, and Microsoft, slipped Tuesday. In Asia, Japan’s Nikkei 225 finished its trading session 4.2% lower on Tuesday, while South Korea’s Kospi sank more than 3%, and Hong Kong’s Hang Seng was off by 1.1%.

Other big Asian technology stocks fell sharply, too: TSMC was down 4%, Samsung Electronics 2.7%, SK Hynix 3.6% and Tokyo Electron 2.5%. In the last year, markets in Asia have not proved as resilient as some Western ones. The index of Shanghai stocks is at a lower level than a year ago, and so is Hong Kong’s. Japan’s Nikkei is up 12%.

The global growth concerns, in particular, seem to be hitting the exporting countries in Asia,” said Julia Lee, a market expert at FTSE Russell. “There’s just so much uncertainty now surrounding the global economy – especially trade and export prospects – that many investors are getting a little edgy about what’s in store.

Focus on the Fed and US Jobs Data

With that, all eyes are on the Federal Reserve, which meets next week to talk about interest rates. Investors are also awaiting this Friday’s US jobs report with bated breath. These may give a better indication of the way the US economy is headed and the way the Fed may adjust its policy in response.

Some market watchers, including Swetha Ramachandran, believe sharp falls in US shares on Tuesday show investors are beginning to doubt the Federal Reserve will make a big cut in interest rates. Lower interest rates, which generally make borrowing cheaper, can help fire up economic activity, but if the Fed doesn’t cut rates, some analysts worry it may be a signal that the economy is still facing significant hurdles.

The Bigger Picture

Let us not forget the big picture: Nvidia shares are still way up from a year ago, reflecting huge growth in AI and the tech sectors as a whole. This recent dip might just be a natural correction after such very rapid growth.

Meanwhile, investors and market experts try to make sense of it all. Global growth concerns, interest rates, job numbers-all pieces of a rather large and cumbersome jigsaw puzzle. For now, the one thing certain is that uncertainty is a big theme in the global markets.

With that said, while Nvidia and other tech companies might have stumbled this week, the long-term story is far from over. But as we head into the wait for more economic data and decisions by central banks, one thing is for sure: the markets are on a rollercoaster ride, with everybody holding tight!