- Wall Street indices are falling, driven by the decline in the Nasdaq.
- Traders remain cautious after the recent rise in stocks.
- Bitcoin’s fall highlights growing investor concerns.
Bitcoin fell sharply on Tuesday, falling more than 6% to fall below $100,000 for the first time since June, as a broader sense of risk aversion rippled through financial markets.
Major US stock indexes also fell, with technology and chip stocks particularly weak, after the CEOs of Goldman Sachs and Morgan Stanley warned that stocks could suffer a pullback.
The cautious mood sent Treasury yields lower, while the U.S. dollar climbed to a four-month high against the euro, increasing pressure on risk assets including cryptocurrencies.
Bitcoin’s decline highlights investors’ growing caution in the face of tightening monetary conditions and market volatility, prompting some traders to reduce their exposure to high-risk assets.
Bank CEOs have warned at an investment summit in Hong Kong of the prospect of a stock market correction of more than 10% over the next two years.
Nvidia shares fell 4%, while a semiconductor index also fell 4%.
Shares of Palantir Technologies PLTR.O fell more than 8% despite the data analytics provider reporting strong quarterly results.
The company, which has more than doubled in value this year, expects fourth-quarter results to beat market expectations as the rapid adoption of artificial intelligence drives demand for its services.
“Big Short” investor Michael Burry, known for his successful bets against the U.S. housing market in 2008, placed bearish bets on Nvidia and Palantir, according to a regulatory filing released Monday.
The S&P 500 fell more than 1% and the Nasdaq more than 2%. The Nasdaq is still up about 21% for the year.
“The market grew as warranted from an earnings perspective, but at one point … it seemed like it was sort of positioning for a risk-free pullback, even in the face of even the slightest disappointment,” said Keith Buchanan, senior portfolio manager at Globalt Investments.
The Dow Jones Industrial Average fell 251.44 points, or 0.53%, to 47,085.24, and the S&P 500 fell 80.42 points, or 1.17%, to 6,771.55, and the Nasdaq Composite fell 486.09 points, or 2.04%, to 23,348.64.
The MSCI world stock index fell 11.51 points, or 1.14 percent, to 996.34.
The pan-European STOXX 600 index fell 0.3%.
Optimism about AI-related deals helped stocks. On Monday, stocks rose following Amazon.com’s $38 billion cloud services deal with ChatGPT creator OpenAI.
The U.S. dollar was supported in part by reduced bets on near-term easing by the Federal Reserve, with divisions within the Fed raising doubt over the prospect of another rate cut this year.
The Fed cut rates last week, but Chairman Jerome Powell said a December rate cut was not a foregone conclusion. Traders are betting on a 65% chance of a rate cut in December, up from 94% a week earlier, CME FedWatch showed.
The euro EUR= fell for the fifth straight session and was down 0.3% at $1.148, its weakest since August 1. Against the yen, the dollar was down 0.5%, although the Japanese currency remained near a recent 8-1/2 month low.
The pound fell after Britain’s finance minister spoke of “tough choices” in her upcoming budget. Sterling GBP= weakened 0.72% to $1.3044.
U.S. Treasury yields fell amid broader risk aversion in financial markets.
Due to the government shutdown, a closely watched monthly employment report from the Bureau of Labor Statistics will not be available Friday, as planned.
The yield on U.S. benchmark 10-year bonds US10YT=RR fell 2 basis points to 4.087%, from 4.107% late Monday.
U.S. crude CLc1 fell 49 cents to $60.56 a barrel, and Brent LCOc1 fell 45 cents to $64.44. A stronger dollar weighed.
