By Shashwat Chauhan and Twesha Dikshit (Reuters) -Wall Street's main indexes lost ground on Thursday, as early enthusiasm driven by Nvidia's earnings faded with investors questioning lofty valuations in the technology sector, while jobs data clouded the outlook for further U.S. interest rate cuts. Nvidia was last down 1% after surging as much as 5% earlier in the day. Most chip-related companies also turned negative, with the Philadelphia SE Semiconductor index now down 2.1%. The world's most valuable company forecast sales above analysts' estimates for the final three months of the year and surpassed expectations for third-quarter revenue. "This situation is fine for now, but what happens in three months' time when the market waits with bated breath for Nvidia's next quarterly earnings update? Even though Nvidia's profits and cash flow remain as healthy as an ultramarathon runner, there are some red flags to consider," said Dan Coatsworth, head of markets at AJ Bell. CEO Jensen Huang shrugged off concerns about AI on a call with analysts, saying, "We see something very different." A year-long rally in high-flying technology stocks had begun to lose some steam as investors became increasingly cautious of a potential AI bubble. Concerns about monetization prospects over the technology, circular spending within the sector and debt issuance have weighed on markets with the Nasdaq sharply off its October high and Nvidia down nearly 9% from its peak. "The people who are selling the semiconductors to help power AI doesn't alleviate the concerns that some of these hyperscalers are spending way too much money on building the AI infrastructure," said Robert Pavlik, senior portfolio manager at Dakota Wealth. At 12:11 p.m. ET, the Dow Jones Industrial Average fell 143.02 points, or 0.30%, to 46,000.74, the S&P 500 lost 30.57 points, or 0.46%, to 6,611.59 and the Nasdaq Composite lost 147.42 points, or 0.64%, to 22,419.92. Most megacap and growth stocks were also well off their day's highs, with Amazon.com down 0.8%. The information technology index was last down 1% after jumping early on, while consumer staples was in the lead. Walmart advanced 6% after the retailer raised its annual forecast for the second time this year and also set a December date to change its stock listing to the Nasdaq from the NYSE. Meanwhile, data showed U.S. job growth accelerated in September, but the unemployment rate rose to 4.4%, suggesting labor market conditions remained sluggish. Traders continued to bet the Federal Reserve will skip an interest rate cut in December, though there was a small pull-back after the release of the jobs data. Thursday's report marks the last jobs report before the Fed's December meeting, with the U.S. Bureau of Labor Statistics set to skip its October report and instead combine nonfarm payrolls for that month with November's report. Palo Alto Networks dropped 6.3% as the cybersecurity firm said it would buy cloud management and monitoring company Chronosphere for $3.35 billion. Declining issues outnumbered advancers by a 1.35-to-1 ratio on the NYSE and by a 1.2-to-1 ratio on the Nasdaq. The S&P 500 posted 12 new 52-week highs and 10 new lows while the Nasdaq Composite recorded 67 new highs and 172 new lows. (Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Anil D'Silva, Krishna Chandra Eluri and Maju Samuel)
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