The tech-led market plunge continued for a fourth day on Tuesday.
High-flying tech and AI names tumbled again, rattled by a cocktail of concerns ahead of Nvidia earnings and ongoing worries about valuations broadly. Wall Street is focused on the chip giant’s results for the third quarter, with the stock down about 7% in the last five days.
Prominent investors have fled the stock recently, including Japanese conglomerate SoftBank and Thiel Macro, the hedge fund of tech titan Peter Thiel, which both have offloaded their entire stakes. Given the AI leader’s status as a bellwether for the broader tech sector and the AI trade, stakes are high ahead of the third-quarter report.
This follows mounting concerns that big tech valuations have risen too high, making them vulnerable to a deeper correction.
Bitcoin also tumbled deeper into bear market territory on Tuesday, erasing its year-to-date gains due to liquidity concerns, waning rate-cut odds, and the broader risk-off shift. The token dipped below $90,000 for the first time since April.
Looming in the background of the recent market decline is the Fed. The odds of a December rate cut have dropped sharply in the last month after the White House said some economic data will likely never be released after the government shutdown, and as some Fed officials delivered hawkish remarks on their views of monetary policy.
The CME FedWatch Tool showed investors think the odds of a 25 basis point cut next month are essentially a coin toss after they were pricing in almost a 100% chance of a cut about a month ago.
Bond yields dropped as investors fled to safe havens. The 10-year Treasury yield fell four basis points to 4.09%
Here’s where US indexes stood around 10 a.m. on Tuesday:
Finally, consumer strength is in focus on Tuesday after another industry bellwether reported disappointing earnings and gave a downbeat forecast. Home Depot, often seen as an indicator for the housing market and the health of the US consumer, reported results that came in below Wall Street estimates for the third consecutive quarter and reduced its full-year sales forecast.
“When we set guidance, we had anticipated that demand would begin to accelerate gradually in the back half of the year as interest rates and mortgage rates eased,” stated CFO Richard McPhail. “But what we saw was that ongoing consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand.”
Here are some of the biggest losers on Tuesday:
Nvidia: -3%
Tesla: -3%
Palantir: -3%
Microsoft -2%
Home Depot: -3%
Despite the pullback and negative speculation about consumer health as the holiday season approaches, finance pros aren’t sounding the alarm just yet. Many say the dip is a natural correction after a stellar rally since April lows.
“The longer-term bull market’s trend remains intact, supported by a constructive macro backdrop including resilient earnings, the resumption of the rate-cutting cycle, the secular AI tailwind, relatively stable credit conditions, and upcoming stimulus from the recently passed One Big Beautiful Bill (OBBA),” stated Adam Turnquist, chief technical strategist of LPL Financial.
David Morrison, senior market analyst at Trade Nation, highlighted the possibility that Nvidia could shift the entire market dynamic if its earnings beat estimates.
“Investors are worried, as can be seen by the size of the recent selloff,” he noted. “But for those of a strongly bearish persuasion, it may be worth considering that the recent pullback in Nvidia’s stock price does give it some room to the upside, should tomorrow’s release beat expectations.”
