Why Is the Stock Market Down; Dow, S&P 500, Nasdaq Open Sharply Lower; Palantir, AMD, Pfizer, Nvidia, More Movers
With the Nasdaq Composite already sitting on huge AI-fueled gains, it doesn’t take much to spark a bit of profit taking. Don’t expect that to change anytime soon.
The tech-heavy index was down 1.3% on Tuesday, though it rallied off its lows from earlier in the session. The Dow cut its decline to 181 points, or 0.4%. The S&P 500 was down 0.8%.
The jitters began with Palantir Technologies, which fell 7.5% after reporting results Monday night that actually beat expectations. But shares had rallied leading into the report; the stock is still up 154% this year and 276% in the past 12 months.
Adding fuel to the selling was a Bloomberg report that included cautious quotes about market valuations from Wall Street chief executives like Ted Pick of Morgan Stanley and David Solomon of Goldman Sachs.
Sevens Report Research’s Tom Essaye tells Barron’s such headlines have combined to draw attention to a recent bout of bad breadth in the market.
“Essentially the rest of the stock market has been going down for over a week now and the only thing that’s been holding the S&P 500 up are the AI names,” Essaye says. “And now we have a very direct series of headlines of caution … on the increases in the AI-related stock prices.”
He thinks such chatter caused some “knee-jerk selling.”
“I don’t think that this is the start of something much bigger,” Essaye says. “The market seems absolutely fine, still embracing a lot of these AI-related headlines, but I do think that we’re going to get these temporary moments of caution because the whole debate ‘Is AI a bubble or not?’ it’s still incredibly unsettled.”
