Nasdaq suffers sharpest fall since October amid earnings unease and liquidity fears
US equities fell sharply overnight, with technology shares leading losses, as investor concerns mounted over whether elevated valuations in the artificial intelligence sector can be justified by company earnings.
The tech-focused Nasdaq Composite index dropped more than 2%, or 486 points, marking its steepest single-day decline in weeks.
The broader S&P 500 closed 1.2% lower, while the Dow Jones Industrial Average, less exposed to the tech sector, dipped 0.5 per cent.
The falls came as several major companies reported third-quarter results that, while broadly solid, failed to quell doubts about stretched valuations.
Shares in data analytics group Palantir Technologies Inc (NYSE:PLTR) slid nearly 9% on Tuesday, despite posting strong numbers after hours on Monday, as analysts questioned its price-to-earnings ratio.
Uber Technologies Inc (NYSE:UBER, ETR:UT8) also reported better-than-expected earnings but saw its shares decline, suggesting investors are demanding more clarity or growth to sustain current market levels.
Attention now turns to chipmaker AMD, which is due to report after the market close, with investors particularly focused on its artificial intelligence business. Results from Spotify and Supermicro are also expected.
Cryptocurrency markets were not spared, with bitcoin falling below $100,000 for the first time since June. Strategists cited declining liquidity, exacerbated by the ongoing US government shutdown, as a key factor.
The shutdown, now in its 35th day, is delaying the release of critical economic data, including a closely watched jobs report due this week. The disruption is also complicating the Federal Reserve’s task of assessing the health of the economy.