U.S. stocks fell sharply Tuesday, extending a worldwide market downturn as some of the biggest names in tech and crypto continued to retreat from record-setting highs.
The S&P 500 dropped 1% in early trading, pulling further away from its all-time high set just weeks ago. The Dow Jones Industrial Average fell 484 points, or 1%, by 10 a.m. Eastern, while the Nasdaq composite slid 1.5%, according to The Associated Press.
Nvidia once again led the decline. The chipmaker’s shares fell 3.2%, bringing its month-to-date loss to 10.8% — deep enough to meet Wall Street’s definition of a correction. The stock has become so large and influential that it can sway the entire S&P 500 on its own, after surging on demand for the company’s AI processors and briefly topping a $5 trillion valuation.
The downturn marks a sharp reversal from the powerful rally that began in April, when markets rebounded after President Donald Trump stunned global trading partners by imposing steep tariffs. Critics have warned for months that the rally was overheating, particularly among companies riding the wave of enthusiasm for artificial intelligence.
A new global fund manager survey by Bank of America Global Research suggests many investors still expect stock prices to rise. But nearly half — 45% — identified a potential AI bubble as the biggest low-probability, high-impact risk facing markets. Concerns are also growing that companies may be “overinvesting,” with the highest share of investors in two decades saying firms are spending too aggressively on AI chips and data centers.
Other market standouts have also stumbled. Bitcoin briefly dropped below $90,000 on Tuesday morning after nearing $125,000 last month.
Home Depot added to the downward pressure, falling 3.1% after reporting weaker-than-expected summer profits. CEO Ted Decker cited a lack of storms that typically boost home-improvement sales, along with “consumer uncertainty and continued pressure in housing.”
Cloudflare slipped 3.1% after a service outage at the infrastructure provider disrupted ChatGPT and other platforms.
Treasury yields eased slightly, with the 10-year yield dipping to 4.09% from 4.13% late Monday.
Overseas markets also posted steep losses. Japan’s Nikkei 225 dropped 3.2% amid rising government bond yields and concerns about increased spending under Prime Minister Sanae Takaichi. South Korea’s Kospi fell 3.3%, while France’s CAC 40 lost 1.6%, reflecting the breadth of the global sell-off.
