Stock indexes drop after rally
MSCI’s gauge of stocks across the globe slid 11.51 points, or 1.14%, to 996.34
Stock indexes dropped on Tuesday, with chip stocks lower as the CEOs of two U.S.’ banks, Goldman Sachs and Morgan Stanley, cautioned that equities could be heading for a retreat, while the dollar jumped to a four-month high against the euro.
MSCI’s gauge of stocks across the globe slid 11.51 points, or 1.14%, to 996.34.
Bank CEOs warned at an investment summit in Hong Kong of the prospect of a stock market correction of more than 10% over the next two years. The comments stoked fears about stretched valuations and a potential market bubble.
Shares of Nvidia were down 4%, while an index of semiconductors also dropped 4%.
Shares of Palantir Technologies declined more than 8% despite the data analytics provider reporting strong quarterly results. The company, which has more than doubled in value this year, forecast fourth-quarter results above market expectations as the rapid adoption of artificial intelligence is boosting demand for its services.
“Big Short” investor Michael Burry, known for his successful bets against the U.S. housing market in 2008, has placed bearish bets on Nvidia and Palantir, according to a regulatory filing on Monday.
There’s definitely a risk-off tone with a lot of AI stocks down, and so a little bit of flight to quality with regard to Treasuries, said Greg Faranello, head of U.S. rates strategy at AmeriVet Securities in New York.
The Dow Jones Industrial Average dropped 251.44 points, or 0.53%, to 47,085.24, the S&P 500 declined 80.42 points, or 1.17%, to 6,771.55 and the Nasdaq Composite shed 486.09 points, or 2.04%, to 23,348.64.
The pan-European STOXX 600 index dropped 0.3%.
The euro slipped for the fifth straight session, and was down 0.3% at $1.1483, its weakest since August 1. Against the yen, the dollar was 0.4% lower at 153.60 yen, though the Japanese currency remained near a recent 8-1/2-month low.
Sterling dipped after the UK finance minister pointed to “hard choices” in her upcoming budget. Sterling shed 0.9% to $1.3015.