US stocks suffered a sharp sell-off last night on the back of jitters over an artificial intelligence (AI) bubble and fears over the path of interest rates.
New York’s tech-heavy Nasdaq slumped by more than 2 per cent while the S&P 500 and Dow Jones each lost more than 1.5 per cent in value.
Chip maker Nvidia, the world’s most valuable company, was down 4 per cent while software firm Palantir dived by 7 per cent and chip firm Broadcom fell 5 per cent.
The firms are among tech stocks whose valuations have soared amid investor enthusiasm for AI, helping to propel Wall Street indices to record highs.
But some observers worry sky-high share prices could amount to a bubble, and fear damaging consequences if it bursts.
The Bank of England warned last month that valuations ‘appear stretched’ and drew comparisons with the mania for dotcom stocks, which went sour 25 years ago.
Tech sell-off: New York’s Nasdaq slumped by more than 2% while the S&P 500 and Dow Jones each lost more than 1.5% in value
Meanwhile, interest rate cuts from the US Federal Reserve have kept stocks buoyant – but doubts are growing over whether there would be another one in December.
The end of a six-week US government shutdown has created further uncertainty. Key economic data relied on by the Fed was not produced and now there are fears that the resumption of data releases could halt rate cuts.
The ‘looming data deluge may spur additional volatility’ said Doug Beath, a strategist at Wells Fargo Investment Institute.
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