US Stocks Decline Amid AI Bubble Concerns
On Tuesday, US equity markets experienced a downward trajectory as apprehensions surrounding a potential AI bubble and the overall state of the US economy continued to unsettle investors.
Market watchers are particularly focused on an impending earnings report from Nvidia (NVDA) and delayed employment data.
The Dow Jones Industrial Average (^DJI) declined by over 1.3%, marking the most significant three-day slump for this blue-chip index since April.
The tech-centric Nasdaq Composite (^IXIC) plummeted nearly 1.8%, while the S&P 500 (^GSPC) registered a decrease of approximately 1.2%, signaling the possibility of a fourth consecutive week of losses.
In a significant development, Bitcoin briefly fell below $90,000 for the first time in seven months, exacerbating a sell-off that has erased the cryptocurrency’s annual gains.
This drop ignited alarm in Asia, where Japanese stocks faced their largest loss since April, concurrently driving down the yields on 10-year Treasury bonds (^TNX).
Concerns regarding both the AI sector and the broader economic landscape have contributed to a prevailing risk-averse sentiment among investors, who remain vigilant as two pivotal events unfold in the coming days.
Nvidia is set to release its third-quarter earnings on Wednesday, a juncture at which investors are reassessing the sustainability of the year’s AI-initiated market boom.
Additionally, there is increased scrutiny over the surge in debt issuance among major tech firms and the substantial investments being funneled into AI data center expansions.
Looking ahead, market participants are poised for the release of the September employment report on Thursday.
This report could substantially influence forecasts regarding the Federal Reserve’s forthcoming policy decisions, marking the first major economic update following the shutdown-induced delays in data dissemination.
Trader sentiment has notably shifted, with expectations for a rate cut significantly reduced from absolute certainty just a month prior, now reflecting only a 46% probability of easing.
In parallel, new data from ADP revealed a deceleration of job losses in the private sector as November approaches. Earnings reports from key retailers are also anticipated to shed light on consumer resilience in the lead-up to the holiday season.
Notably, Home Depot (HD) adjusted its full-year profit guidance downward after missing earnings estimates, driving its stock down nearly 4%. Additionally, significant results from retail giants Walmart (WMT) and Target (TGT) are expected later this week.
Source link: Finance.yahoo.com.
