GLOBAL MARKETS-US stocks join global rally as Nvidia results quell bubble fears, jobs data beats expectations

NEW YORK, Nov 20 (Reuters) - Wall Street stocks followed European shares' lead by moving sharply higher on Thursday, and benchmark Treasuries dipped as investors digested a delayed employment report and quarterly results from Nvidia, which allayed fears of an artificial intelligence bubble.

All three major U.S. stock indexes advanced, with solid gains in the Magnificent Seven group of AI-adjacent momentum stocks putting the tech-heavy Nasdaq out front. Benchmark Treasury yields dipped along with gold, providing further signs of market participants' reawakened risk appetite.

Chipmaker and AI darling Nvidia NVDA.O posted its hotly anticipated results after Wednesday's closing bell, delivering consensus-beating earnings and stronger-than-expected forward guidance, which soothed jitters over inflated valuations in the sector.

"Nvidia's report is exactly what the market needed," said Jake Dollarhide, CEO at Longbow Asset Management in Tulsa, Oklahoma. "The worries and wrangling over the concerns over an AI bubble have been greatly exaggerated. Nvidia's earnings yesterday show the AI boom and trade could easily bleed into a Santa Claus rally as we potentially blast off into year-end."

Employment data, unavailable throughout the longest-ever U.S. federal government shutdown, reported more jobs than expected, but a surprising uptick in the unemployment rate suggested a softening in labor market conditions.

But the September jobs report is stale, and as a result of the decision to combine the October and November reports, the U.S. Federal Reserve will have just one month of dated employment numbers to inform its rate decision at next month's policy meeting.

Financial markets are pricing in a 43.8% likelihood that the central bank will implement its third interest rate cut of the year at the meeting, down from about 50% at the same time last week and near certainty a month ago, according to CME's FedWatch tool.

But not everyone agrees.

"The Fed is going to have to go on its own guts, and from a contrarian viewpoint, I believe that they will cut by 25 basis points," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"The rhetoric that we're hearing from a lot of Fed members is just playing it safe," Cardillo added. "But I think the dovish members are probably going to win, and they are going to be right."

NASDAQ LEADS WAY HIGHER

The Dow Jones Industrial Average .DJI rose 655.31 points, or 1.41%, to 46,789.96, the S&P 500 .SPX rose 118.35 points, or 1.77%, to 6,759.85 and the Nasdaq Composite .IXIC rose 524.22 points, or 2.32%, to 23,088.45.

European shares rode the Nvidia wave, benefiting from a global relief rally.

MSCI's gauge of stocks across the globe .MIWD00000PUS rose 14.33 points, or 1.47%, to 991.54.

The pan-European STOXX 600 .STOXX index rose 1.11%, while Europe's broad FTSEurofirst 300 index .FTEU3 rose 25.05 points, or 1.12%.

Emerging market stocks .MSCIEF rose 12.93 points, or 0.95%, to 1,373.24. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed higher by 1.07%, to 705.40, while Japan's Nikkei .N225 rose 1,286.24 points, or 2.65%, to 49,823.94.

U.S. Treasury yields dropped after the U.S. unemployment rate unexpectedly edged up to 4.4%, raising the probability of further easing from the Fed before year-end.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 1.7 basis points to 4.114%, from 4.131% late on Wednesday.

The 30-year bond US30YT=RR yield fell 1.4 basis points to 4.7378% from 4.752% late on Wednesday.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Fed, fell 2.8 basis points to 3.571%, from 3.598% late on Wednesday.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.12% to 100.21, with the euro EUR= down 0.08% at $1.1526.

Against the Japanese yen JPY=, the dollar strengthened 0.43% to 157.82.

In cryptocurrencies, bitcoin BTC= gained 0.07% to $90,602.37. Ethereum ETH= declined 0.17% to $2,983.86.

Oil prices got a boost from a bigger-than-expected draw on U.S. crude stockpiles amid the tailwind of the broader equities rally.

U.S. crude CLc1 rose 1.09% to $60.09 a barrel and Brent LCOc1 rose to $64.27 per barrel, up 1.2%.

Gold prices inched higher as investors assessed the delayed jobs report. Spot gold XAU= rose 0.2% to $4,088.99 an ounce. U.S. gold futures GCc1 rose 0.31% to $4,090.40 an ounce.