Tech stocks, particularly Nvidia, decline amid concerns over valuation, while Wall Street experiences a broader pullback fueled by increased investor optimism.
Wall Street has lost some of the momentum it has built up over the year as leading tech stocks , particularly AI-powerhouse Nvidia , continued to slide on Tuesday. The S&P 500 is poised for one of its best years since the millennium, driven by a resilient U.S. economy and optimism surrounding President-elect Donald Trump's pro-growth agenda. Investors are betting that Trump's policies will stimulate economic expansion without sparking runaway inflation.
At the same time, the Federal Reserve has begun easing monetary conditions, trimming interest rates from their highest levels in two decades. Nvidia, one of the star performers driving 2024's historic market gains, dropped 3.4 percent amid mounting concerns over its sky-high valuation. This marks its eighth decline in the past nine sessions, a stark reminder of how fragile the tech rally can be. With shares now more than 10 percent below their June peak, investors are questioning whether Nvidia's meteoric rise—fueled by AI euphoria—can withstand growing scrutiny. The S&P 500 slipped 0.6 percent on Tuesday, while the Dow Jones Industrial Average lost 257 points, or 0.6 percent. The Nasdaq composite, fresh off a record high, shed 0.7 percent by mid-morning. Meanwhile, strategists at Bank of America are also sounding the alarm on soaring investor confidence. A survey of global fund managers revealed shrinking cash reserves, with many pouring capital into U.S. equities. Such low cash holdings were last seen in 2002 and 2011, both of which preceded periods of volatility for risky assets. Michael Hartnett, chief investment strategist at BofA Global Research, noted that economic optimism, based on expectations for economic growth and other indicators, is now at its highest level since August 2002, another signal that sentiment might be overheated
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