The final results of the session indicate that the Dow Jones Industrial Average fell 1.07% to 46,091 points, the tech-heavy Nasdaq Composite Index dropped 1.21% to 22,432 points, and the broader S&P 500 Index declined 0.83% to 6,617 points.
“Wall Street is adopting a cautious stance due to concerns related to the high valuation levels” of certain stocks, highlighted Jose Torres from Interactive Brokers.
“Part of the recent market losses can be explained by apprehensions regarding (…) the field of artificial intelligence,” stated Art Hogan from B. Riley Wealth Management to Agence France-Presse (AFP).
Shares of tech giants have reached astronomical levels in the stock market in recent months, fueled by the hope that massive investments in AI will pave the way for a new growth cycle.
However, analysts are increasingly worried that some stocks have risen too much and too quickly, leading to the creation of a speculative bubble around AI.
Global stock markets closed lower today, pressured by these concerns.
In an interview with the British station BBC, Sundar Pichai, CEO of Alphabet, Google’s parent company, acknowledged today that all companies would be heavily impacted if this AI bubble bursts, adding that the increase in investments was “an extraordinary moment,” potentially accompanied by a certain degree of irrationality.
“A turning point (…) may come from Nvidia’s results tomorrow [Wednesday], after the close” of Wall Street, Art Hogan speculates.
The chip giant’s shares fell another 2.62% on Tuesday, to $181.71. They have dropped more than 12% since the closing peak at the end of October.
“Good news” from the world’s largest company by market value “should generate some enthusiasm for other AI sector players that have also experienced declines,” Hogan noted.
Meanwhile, “visibility on the Fed’s next steps has become very uncertain, which doesn’t help,” the analyst warned.
Several members of the institution have recently adopted a cautious stance regarding a new rate cut after the monetary policy meeting scheduled for December 9 and 10.
These positions echo those of Fed Chairman Jerome Powell, who believes that additional monetary easing is far from certain at the institution’s next meeting.
To get a better sense of the institution’s preferred course, the market awaits a series of data releases this week, which were delayed by the recent government shutdown in the United States, including the September employment report, scheduled for Thursday.
Shares of American building materials retailer Home Depot fell sharply (-5.82% to $337.18) after the company cut its full-year forecast, primarily due to weaker demand.
This week also expects financial results from American retail giants Walmart (-1.40%) and Target (+0.30%).
Meta, Facebook’s parent company, closed lower (-0.54%, to $598.74), despite a U.S. federal judge ruling today that the company did not abuse its dominant position in the social media market.
The court thus rejected arguments presented by the Federal Trade Commission (FTC) — a consumer protection agency — five years ago, after the acquisition of Instagram and WhatsApp.
