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The US stock market fell to one of its worst days since the spring selloff on Thursday, as Nvidia and other AI superstar stocks continued to slide on concerns that their prices have risen too high.
The market is also worried about whether interest rates will be cut. wall Street It is believed that this will actually happen.
The S&P 500 fell 1.7 percent and slipped further from its all-time high set late last month. It was the worst day in a month for the index that centers on many 401(k) accounts and the second-worst day since April’s decline after Pres. donald trump Shocked the world with its “Liberation Day” tariffs.
The Dow Jones Industrial Average fell 797 points, or 1.7 percent, from a record set a day earlier, while the Nasdaq Composite dropped 2.3 percent.
Nvidia was the biggest weight on the market after the chip company fell 3.6 percent. Other stocks caught up in the artificial-intelligence craze also struggled, including a 7.4 percent decline for Super Micro Computer, a 6.5 percent decline for Palantir Technologies and a 4.3 percent decline for Broadcom.
Questions are rising about how high the AI darlings can go after their already spectacular gains. For example, earlier this month, Palantir was reporting a staggering rise of nearly 174 percent so far this year.
Such sensational performances have been one of the top reasons why the US market has broken records despite a recession in the job market and high inflation. However, AI stock prices have soared so high that they are being compared to the 2000 dot-com bubble, which eventually burst and pulled the S&P 500 down by nearly half.
Meanwhile, stocks outside AI also fell on Wall Street as traders worried that the Federal Reserve might not make another cut in interest rates in December, as many were expecting.
Wall Street loves low interest rates because they can boost the economy and prices for investments, even though they can also worsen inflation. A pause in cuts could push US stock prices lower as they have already hit record highs on expectations of more cuts.
Expectations have diminished sharply in recent days that the Fed will cut its key interest rate for the third time this year. Traders now see the chance of a coin flip being roughly 51.9 percent, up from about 70 percent a week ago, according to data from CME Group.
Recent comments from Fed officials have helped dispel doubts.
Federal Reserve Bank of Boston President Suzanne Collins said late Wednesday that it would be appropriate to keep interest rates steady “for some time.” This was a reversal from a speech last month, when he supported another cut.
The Fed’s work became more difficult recently due to the US government shutdown, which delayed updates on the job market and other signals about the economy. That leaves it uncertain whether a slowing job market or higher inflation is the bigger threat.
Much of the stock market surge was caused by the U.S. government shutdown, as has historically often been the case, but Wall Street is bracing for potential volatility as the government returns to issuing those updates. The fear is that the data could persuade the Fed to stop cutting rates.
“The flood of data could lead to additional volatility in the coming weeks,” according to Doug Beath, global equity strategist at Wells Fargo Investment Institute.
On Wall Street, Walt Disney Co. helped lead the market lower after falling 7.7 percent. The entertainment giant reported profit in the latest quarter that exceeded analysts’ expectations, but its revenue fell short.
That helped offset a 4.6 percent jump for Cisco Systems after the tech giant posted profit and revenue that beat analysts’ estimates.
Another company that saw its shares rise relatively short was Berkshire Hathaway, the company run by famed investor Warren Buffett. He is known to like a bargain and does not buy a stock when he finds it too expensive. Berkshire Hathaway rose 2.1 percent.
All told, the S&P 500 fell 113.43 points to 6,737.49. The Dow Jones Industrial Average fell 797.60 to 47.457.22 and the Nasdaq Composite dropped 536.10 to 22,870.36.
In the bond market, Treasury yields rose, putting pressure on the prices of stocks and other investments.
The yield on the 10-year Treasury rose to 4.12 percent from 4.08 percent late Wednesday.
In stock markets overseas, indices declined in Europe after modest gains in Asia.
Tokyo’s Nikkei 225 index rose 0.4 percent, while Japanese tech giant SoftBank Group lost 3.4 percent. It has been struggling since it said earlier this week it had sold its entire $5.8 billion stake in Nvidia.
Another loser was Bitcoin, whose price fell below $99,000. Last month it was close to $125,000.