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Financial Markets 11/18 09:42
NEW YORK (AP) -- The U.S. stock market is falling sharply again on Tuesday,
joining a global-sell off stretching from Asia to Europe, as Nvidia, bitcoin
and other Wall Street stars keep falling on worries that their prices shot too
high.
The S&P 500 dropped 1% and pulled further from its all-time high set late
last month. The Dow Jones Industrial Average was down 484 points, or 1%, as of
10 a.m. Eastern time, and the Nasdaq composite was 1.5% lower.
Nvidia was again the heaviest weight on the market, and its drop of 3.2%
brought its loss for the month so far to 10.8%. That's a steep enough fall that
Wall Street has a name for it: a correction.
What Nvidia does matters disproportionately to investors because it's the
most influential stock on Wall Street. It can almost single-handedly steer the
direction of the S&P 500 on some days because of its immense size, after
fervent demand for its AI chips helped it briefly top $5 trillion in total
value. And the S&P 500 sits at the heart of many investors' 401(k) accounts.
Nvidia's and the U.S. stock market's struggles are a sharp turnaround from
months of relentless rallying since April, when Wall Street sold off after
President Donald Trump shocked the world with stiff tariffs.
That rally, though, was so strong that critics said it may have carried
stock prices too high, too fast and left the market at risk of a sharp drop.
They pointed in particular to stocks swept up in the mania around
artificial-intelligence technology, which have been surging at spectacular
speeds.
Many big investors still seem to be expecting stock prices to rise further,
according to the latest monthly survey of global fund managers by Bank of
America Global Research. But when asked what the No. 1 risk for the market is,
one with a lower probability of happening but a high chance of damage, 45%
pointed to an AI bubble. That beat out trouble in the bond market, inflation
and trade wars.
The highest net percentage of investors in 20 years is also saying companies
are "overinvesting," according to the survey. The worry is that all the
investment pouring into AI chips and data centers worldwide may not produce the
kind of revolution that proponents have been predicting, or at least not as
profitable a one.
Other high-flying areas of the market with their own evangelists have also
been struggling lately. Bitcoin's price briefly fell below $90,000 during the
morning, down from nearly $125,000 last month.
Home Depot helped drag the market lower after falling 3.1%. It reported a
weaker profit for the summer than analysts expected and cited a variety of
reasons. Chief among them was a lack of storms, which would have driven
customers to buy more home-improvement supplies. But CEO Ted Decker also
pointed to "consumer uncertainty and continued pressure in housing" for
preventing an expected increase in demand from happening.
Reporting stronger profits is one of the ways a company can make its stock
price look less expensive, because stock prices tend to track with earnings
over the long term.
Elsewhere on Wall Street, Cloudflare fell 3.1% after an issue at the
internet infrastructure provider caused global outages for ChatGPT and other
services.
In the bond market, Treasury yields eased. The yield on the 10-year Treasury
sank to 4.09% from 4.13% late Monday.
In stock markets abroad, indexes tumbled across Europe and Asia.
Japan's Nikkei 225 dropped 3.2% after feeling extra pressure from a jump in
Japanese government bond yields, reflecting rising risks as Prime Minister
Sanae Takaichi prepares to boost government spending and push back the
timetable for bringing down Japan's huge national debt.
South Korea's Kospi sank 3.3%, and France's CAC 40 fell 1.6% for two of the
larger drops worldwide.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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