Traders work on the floor of the New York Stock Exchange.
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Stocks fell again on Tuesday as tech stocks continued to fall on concerns about the valuations of artificial intelligence stocks. Bitcoin It briefly fell below $90,000, a sign that investors are taking less risk.
of Dow Jones Industrial Average It fell by 365 points (0.8%). of S&P500 The stock fell 0.5%, on pace for a fourth straight loss, the longest decline since August. of Nasdaq Composite It decreased by 0.8%.
Today’s move was pressured by AI chip darlings Nvidiafell more than 1%, friends of the “Magnificent Seven” Amazon and microsoft. Both of them withdrew by 3% each.
“We could see an 8% (or) 9% decline when this is all said and done,” Sam Stovall, chief investment strategist at CFRA, said of the S&P 500. “It could even end sooner if we get the kind of earnings that analysts are hoping for from Nvidia and weak employment numbers that don’t suggest a recession.”
Nvidia has fallen 9% this month ahead of the semiconductor maker’s third-quarter results, which will be released after the close of trading Wednesday. The company, which is reporting toward the end of a strong earnings season, is at the center of a debate about the strength of this year’s AI-powered market rally, as a boom in Big Tech corporate bond issuance raises concerns about soaring valuations for tech companies and the health of AI’s fundamentals.
“If you have a top company in a top industry within a top sector saying something very optimistic about the future and at the same time reporting better-than-expected earnings, sales and margins, I think that does a great job of calming investors’ nerves,” Stovall said. “The real question is, ‘When can we monetize this capital investment?’ And that’s not going to happen this quarter or next quarter, but it’s expected in the not-too-distant future.”
The big AI partnership announced on Tuesday failed to lift related stocks like such deals in the past. AI startup Anthropic has announced a $30 billion investment with Microsoft, with Microsoft and Nvidia also investing billions in Anthropic. Nvidia and Microsoft are still in the red after this deal.
The strategist continued, “At the moment, profits are dissipating naturally, and people have to question the reasons behind that.” “Something else is going to have to happen for investors to say, ‘Wait a minute, maybe we were worried too soon.’
Bitcoin fell below $90,000 on Tuesday, but has since recovered. Many tech investors hold large amounts of cryptocurrencies, so the drop raised concerns that an even bigger stock market decline could follow. Bitcoin last traded at just over $91,000.
Besides technology, home depot Home Improvement’s stock price fell after it reported poor results and revised down its full-year outlook.
