Major US Indices Slide Amid Tech Stock Rout
Wall Street experienced another day of losses on Tuesday, with a renewed decline in Nvidia and other major technology stocks dampening market sentiment. This downturn has amplified existing concerns that recent stock valuations had climbed to unsustainable levels, prompting a wave of selling pressure.
Early trading saw the S&P 500 fall by 0.3%, while the Dow Jones Industrial Average plummeted by 361 points. The tech-heavy Nasdaq composite declined by 0.6%, according to an AP report. This weakness followed a period of heightened volatility for the US market, reflecting growing investor caution.
Home Depot and AI Stocks Lead the Decline
The retail giant Home Depot emerged as one of the biggest drags on the market after it reported a summer-quarter profit that fell short of analyst expectations. The company attributed this shortfall to a combination of factors, including fewer major storms, anxious consumers, and a persistent slowdown in the housing market. Consequently, the company's shares dropped by 3.1%. Home Depot also revised its fiscal 2025 guidance, lowering its adjusted earnings outlook while raising its sales growth forecast.
The sell-off in artificial-intelligence-related stocks continued to shape the market's direction. Nvidia, whose shares have already fallen 8.6% this month, slipped another 1.1% ahead of its crucial earnings announcement scheduled for Wednesday. This followed a 1.9% decline on Monday. The weakness spread to other major chipmakers, with Micron, Intel, and Qualcomm all losing between 1% and 2%. Among the tech behemoths, Microsoft slid 1.5% and Amazon dropped 1.8%.
Adding to the tech sector's woes, shares of Cloudflare weakened after a technical issue at the internet infrastructure provider triggered widespread global outages, affecting popular services like ChatGPT.
Global Ripples and Key Data Ahead
The negative sentiment on Wall Street resonated across global markets. Major indices in Germany, France, and the UK were down by 1.4% by midday. The cautious mood was also reflected in futures trading, where S&P 500 and Dow futures were down 0.6% and 0.7% respectively, and Nasdaq futures retreated 0.7%.
Investors are now bracing for the delayed US employment data, which is scheduled for release on Thursday following the prolonged government shutdown. This update is highly anticipated as it is expected to significantly influence the US Federal Reserve's next decision on interest rates. While markets had been hoping for continued rate cuts to support a potentially weakening labour market, Fed officials have recently pointed to the ongoing risk of inflation, which remains above the central bank's 2% target.
A particularly strong jobs report could delay any further rate cuts, whereas weak numbers might fuel concerns about the economy's momentum. Fed policymakers have also cited the limited availability of data due to the shutdown as a reason for adopting a more cautious and measured stance.
The sell-off extended sharply across Asian markets. In Japan, the Nikkei 225 slumped 3.2%, dragged down by major chip-related firms like Tokyo Electron and Advantest. The Kospi in Seoul tumbled 3.3%, with Samsung Electronics and SK Hynix posting significant losses. Taiwan's Taiex fell 2.5% as TSMC retreated, while Hong Kong's Hang Seng index dropped 1.7% and China's Shanghai Composite lost 0.8%. Australia's S&P/ASX 200 also shed 1.9%.
Other high-momentum assets softened as well. Bitcoin extended its recent declines, slipping another 1% to around $91,360, marking its lowest level since April. Gold also eased slightly.
