The U.S. stock market experienced a significant slump on Thursday, driven by sharp declines in AI technology stocks like Nvidia, raising concerns about overvaluation and drawing comparisons to the 2000 dot-com bubble.
The U.S. stock market saw a substantial decline on Thursday, with the S&P 500 falling 1.3%, the Dow Jones Industrial Average losing 1%, and the Nasdaq composite dropping 2%. This downturn was largely attributed to the continued weakening of major artificial intelligence (AI) technology stocks, particularly Nvidia, which fell 4.1%. Other AI 'darlings' like Super Micro Computer (-6.4%), Palantir Technologies (-5.1%), and Broadcom (-4.9%) also struggled. This slump comes amidst growing questions about the sustainability of these AI stocks' spectacular gains, with some analysts drawing parallels to the 2000 dot-com bubble, which ultimately burst and dragged the S&P 500 down significantly. Beyond AI stocks, Wall Street is also anticipating new economic data following a six-week government shutdown, fearing that the information could influence the Federal Reserve's decisions on interest rates. Traders have already reduced their bets on a December rate cut, leading to higher bond yields, which can negatively impact stock prices. Doug Beath, global equity strategist at Wells Fargo Investment Institute, warned that this 'looming data deluge may spur additional volatility'. In other market news, The Walt Disney Co. contributed to the market's decline, falling 9.2% after its revenue missed analysts' forecasts despite beating profit expectations. Conversely, Cisco Systems saw a 4.7% jump after reporting stronger-than-expected profit and revenue. Internationally, European indexes sagged, while Asian markets saw modest gains, with Tokyo's Nikkei 225 rising 0.4% even as SoftBank Group, which recently sold its Nvidia stake, continued to fall.
