US stocks experienced a downturn on Tuesday, driven by growing concerns about a potential AI bubble and the overall state of the US economy. This market unease comes just ahead of a significant earnings report from Nvidia and the delayed jobs data, which is expected to impact market sentiment.
The Dow Jones Industrial Average saw a drop of over 1.3%, marking its worst three-day performance since April. The tech-focused Nasdaq Composite declined nearly 1.8%, while the S&P 500 fell approximately 1.2%, signaling a potential fourth consecutive session of losses.
In the cryptocurrency market, Bitcoin fell below $90,000 for the first time in seven months, an alarming signal that contributed to a sell-off erasing all of its gains for the year. This slump reverberated across Asia, leading to the worst losses in Japanese stocks since April, while pushing down yields on 10-year Treasury notes.
Investor concerns regarding an AI bubble and economic stability have created a risk-averse atmosphere as markets exhibit signs of strain. Upcoming events, including Nvidia’s third-quarter earnings announcement and the September jobs report, will be crucial in shaping investor outlooks.
Analysts are particularly focused on Nvidia’s performance, which could either reinforce or diminish confidence in the AI-driven market rally seen earlier this year. Additionally, there has been a notable increase in debt issuance among large tech companies, leading some to question the sustainability of substantial investments in AI data centers.
On Thursday, Wall Street will receive the September jobs report, a key indicator of economic health, which was delayed due to the recent US government shutdown. Expectations surrounding the Federal Reserve’s policy direction are shifting, with traders now anticipating only a 46% chance of rate cuts, a stark contrast to the total conviction seen a month prior.
Additionally, data released from ADP indicated a slowdown in job losses within the private sector leading up to November. Earnings reports from retailers are set to provide further insight into consumer strength as the holiday season approaches. Home Depot has already adjusted its full-year profit guidance downward after missing earnings estimates, contributing to a nearly 4% drop in its share price. Major retail players like Walmart and Target are expected to announce their results later this week, which will also help gauge consumer behavior in the current economic climate.