Dow, S&P 500, Nasdaq pull back as AI worries sap markets ahead of Nvidia earnings
U.S. stocks tumbled on Tuesday as concerns about an AI bubble and the U.S. economy continue to put markets on edge overall, with a key Nvidia (NVDA) earnings report and jobs data delayed by the shutdown on the horizon.
The Dow Jones Industrial Average (^DJI) fell more than 1.3%, the worst three-day rise for the blue-chip benchmark index since April. The tech-heavy Nasdaq Composite (^IXIC) is down about 1.8%, while the S&P 500 (^GSPC) is down roughly 1.2%, looking for its fourth straight session of losses.
Bitcoin briefly fell below $90,000 for the first time in seven months on Tuesday, deepening a sell-off that wiped out all of the leading cryptocurrency’s gains for the year. That raised alarm in Asia, where Japanese stocks posted their worst loss since April, and helped push 10-year Treasury yields (^TNX) lower.
Concerns about the AI bubble and the US economy have increased risk aversion as markets begin to show signs of tension. Investors are watching for two important tests of these concerns in the coming days.
Chipmaker Nvidia’s third-quarter results came Wednesday as investors rethink the durability of this year’s AI-fueled market rally. The increase in Big Tech debt issuance is also in focus as analysts question massive spending on AI data center construction.
On Thursday, Wall Street will look to the release of the September employment report to help shape expectations for the Federal Reserve’s next policy moves. This is the first major economic reading since the US shutdown delayed official data releases. Investors significantly discounted the odds of a rate cut from consensus a month ago and are now pricing in a 46% chance of easing.
Meanwhile, ADP data released on Tuesday showed that job losses in the private sector slowed towards November. Earnings streams from retailers will also provide insight into consumer strength ahead of the holiday season. Home Depot (HD) cut its full-year profit target after earnings missed forecasts before the bell, sending its shares down nearly 4%. Results for major chains Walmart (WMT) and Target (TGT) will also be announced this week.
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