- The Dow Jones Industrial Average tumbled more than 500 points, marking a significant downturn for the market.
- The S&P 500 fell for the fourth consecutive session, its longest losing streak since August, driven by a broad tech sector decline.
- AI-darling Nvidia dropped 2% ahead of its quarterly earnings, amplifying concerns about high valuations in the tech industry.
- Bitcoin’s brief dip below $90,000 signaled reduced risk appetite among investors, adding to market anxiety.
U.S. stocks took a sharp downturn on Tuesday, with the Dow Jones Industrial Average plunging 562 points, or 1.2%, as a slump in technology shares spooked investors. The S&P 500 shed 1.1%, recording its fourth straight day of losses, while the tech-heavy Nasdaq Composite fell 1.5%.
The sell-off was largely fueled by growing concerns over the high valuations of artificial intelligence stocks, which have powered much of this year’s market rally.
Tech Sector Slump Sparks Market Sell-Off
At the heart of the decline was chipmaker Nvidia, which saw its stock fall another 2%. The company, a bellwether for the AI boom, has now dropped 10% this month ahead of its highly anticipated third-quarter earnings report due Wednesday.
Other “Magnificent Seven” stocks, including Amazon and Microsoft, also came under significant pressure. The negative sentiment persisted even after a major AI partnership was announced. AI startup Anthropic revealed it would spend $30 billion with Microsoft, which, along with Nvidia, will invest billions back into Anthropic. Despite the massive deal, both Microsoft and Nvidia shares remained firmly in the red.
Adding to the cautious mood, Alphabet CEO Sundar Pichai told the BBC that the current AI boom has some “irrationality,” warning that no company would be “immune” if the bubble were to burst.
Broader Concerns Weigh on Investor Confidence
The anxiety wasn’t limited to the tech sector. Bitcoin, often seen as a barometer for investor risk appetite, briefly fell below $90,000 before recovering slightly. The drop raised worries that a broader de-risking trend was underway, potentially leading to further stock market declines.
Outside of tech, Home Depot shares declined after the retailer missed earnings expectations and cut its full-year outlook, signaling potential weakness in consumer spending.
“The market narrative has certainly shifted dramatically over the past few weeks,” said Garrett Melson, a portfolio strategist at Natixis Investment Managers Solutions. He noted that the market has moved from rewarding AI-related spending to “rapidly growing skepticism of further investment and future returns.”
Investors are also contending with uncertainty surrounding the Federal Reserve’s next move, with growing concern that the central bank may not implement a third rate cut in December. All eyes are now on the Fed’s upcoming meeting minutes and key economic data releases later this week.