U.S. stocks fell on Tuesday after another volatile trading session, as renewed concerns about overheated valuations weighed on Nvidia, bitcoin and other high-flying assets.
The S&P 500, which plunged as much as 1.5% early in the day, briefly pared most losses before declining again to close 0.8% lower, extending its pullback from a record high reached late last month. The Dow Jones Industrial Average dropped 498 points, or 1.1%, while the Nasdaq composite slid 1.2%.
Nvidia’s correction deepens
Nvidia once again pressured the broader market, sliding 2.8% and pushing its month-to-date decline past 10%—a drop steep enough to qualify as a correction. The chipmaker’s sheer size makes its movements disproportionately influential: it remains the single most important driver of daily swings in the S&P 500 after briefly surpassing $5 trillion in market value on AI-chip demand.
From record rally to rapid rethink
The market’s retreat marks a sharp reversal from the powerful rally that began in April, following a sell-off triggered by President Donald Trump’s tariff announcement. That rebound pushed many AI-linked stocks to extreme valuations, prompting warnings that prices had risen too far, too fast.
Nvidia’s stock more than doubled in four of the last five years. Palantir also doubled within the first six-and-a-half months of this year.
A Bank of America Global Research survey of global fund managers reflects these concerns:
45% now cite an AI bubble as the biggest low-probability, high-impact risk to markets.
A record share of investors say companies are overinvesting, particularly in AI chips and data centers.
The fear is that a massive capital wave into AI infrastructure may not produce the transformative, highly profitable outcomes investors expect—at least not in the near term.
Bitcoin, Home Depot add to pressure
Other speculative areas also came under strain. Bitcoin briefly dropped below $90,000, down sharply from its nearly $125,000 peak last month, before rebounding toward $93,000.
Home Depot slumped 6% after reporting weaker-than-expected summer earnings. The retailer blamed the absence of major storms—events that typically boost demand—as well as consumer caution and continued housing-market stress.
Nvidia’s upcoming earnings report on Wednesday now carries even greater weight: stronger results could stabilize its stock, while a disappointment risks accelerating the correction.
Other notable movers
Cloudflare shed 2.8% after an earlier technical issue at the internet infrastructure firm briefly disrupted services worldwide, including ChatGPT.
Market data
S&P 500: ↓ 55.09 to 6,617.32
Dow: ↓ 498.50 to 46,091.74
Nasdaq: ↓ 275.23 to 22,432.85
In the bond market, the 10-year Treasury yield slipped to 4.11% from 4.13%. Yields have been volatile as traders reassess expectations that the Federal Reserve will cut interest rates again in December. The Fed has already lowered rates twice this year to support a cooling job market, but its room to act is limited with inflation still above the 2% target.
Global markets
Global equities also tumbled:
South Korea’s Kospi: ↓ 3.3%
Japan’s Nikkei 225: ↓ 3.2%
France’s CAC 40: ↓ 1.9%.
