Stocks Drift After Monday Rally Amid Tech Selloff/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street opened Tuesday with mixed results after a strong start to the week, with Nvidia sliding following SoftBank’s surprise stake sale. While broader indexes remain near record levels, market momentum slowed amid renewed caution about tech valuations and holiday closures in bond markets.
Wall Street Dips Following AI Stock Selloff: Market Drift Quick Looks
- S&P 500 slips 0.2%, Nasdaq down 0.5%, Dow gains 73 points
- SoftBank offloads entire Nvidia stake, prompting 2% drop in Nvidia shares
- AI stock rally cools, raising valuation concerns among investors
- Bond markets closed for Veterans Day; trading volume light
- Paramount Skydance gains on updated cost-cutting targets despite missed earnings
Stocks Drift After Monday Rally Amid Tech Selloff
Deep Look
After a robust Monday rebound, U.S. stocks eased into more cautious territory on Tuesday as Wall Street drifted into mixed trading. While the S&P 500 dipped 0.2% and the Nasdaq composite slipped 0.5%, the Dow Jones Industrial Average inched higher by 73 points, reflecting the market’s attempt to digest recent gains and mounting tech sector concerns.
This pause comes as major indexes hover near all-time highs, fueled in part by recent rallies in artificial intelligence-related stocks. But sentiment cooled quickly when Japanese tech giant SoftBank Group Corp. revealed it had sold its entire stake in AI chipmaker Nvidia last month for $5.83 billion. Nvidia, a major driver of the market’s gains in 2025, slid 2% in early trading.
SoftBank shares also dropped 2% following the announcement, underlining global investor unease over potentially inflated tech stock valuations. Nvidia’s near 6% gain the previous day helped lift markets sharply, making Tuesday’s pullback a sobering reality check for bullish investors.
AI Valuations Spark Debate
The market’s recent surge has largely been attributed to investor enthusiasm over AI innovations. However, comparisons to the early 2000s dot-com bubble have begun surfacing, especially as AI-linked stocks like Nvidia become increasingly central to broader index performance.
“Sentiment is everything,” said Ipek Ozkardeskaya, senior analyst at Swissquote. “When investors are in a good mood, they interpret every headline as bullish. But the reverse is also true — one data point can turn everything sour.”
While the AI-driven rally has created huge winners, many on Wall Street are beginning to question whether prices have surged too far, too fast, particularly ahead of key economic and interest rate decisions.
Corporate Earnings: A Mixed Bag
As third-quarter earnings season winds down, about 80% of companies in the S&P 500 have surpassed analysts’ expectations, according to FactSet. That’s slightly above the historical average, but given the large run-up in stock prices since April, companies have faced pressure to outperform in both results and forward guidance.
Paramount Skydance, the entertainment giant recently formed after Paramount’s acquisition of Skydance, jumped 4.2% in after-hours trading. Although it missed revenue and profit targets, investors were encouraged by the company’s updated cost-cutting goal, now targeting $3 billion in savings by 2026 — up from the previous $2 billion.
Market Conditions: Holiday Quiet and Global Factors
With the U.S. bond market closed Tuesday in observance of Veterans Day, trading volumes were expected to be thinner than usual. The lack of bond activity also meant no new signals from interest rate markets, which many traders use to gauge expectations for future Federal Reserve policy shifts.
Investors continue to weigh the potential for the Fed to pause rate hikes or even implement cuts, especially if inflation cools or growth data weakens further. Markets are also responding to speculation that the government shutdown may be resolved soon, which could provide additional short-term relief.
Global Markets Reflect Cautious Optimism
European markets largely moved higher, supported by positive earnings and improving sentiment. Germany’s DAX gained 0.1%, France’s CAC 40 rose 0.8%, and the FTSE 100 in the U.K. added 0.7%.
In Asia, results were mixed. Japan’s Nikkei 225 edged down 0.1% to 50,842.93. Chinese markets showed divergent trends, with the Hang Seng Index in Hong Kong rallying 0.2% by close, while the Shanghai Composite dropped 0.4%.
The South Korean Kospi rebounded 0.8%, continuing to recover from last week’s declines, while Australia’s S&P/ASX 200 dipped 0.2%. In India, the Sensex added 0.4%, and Taiwan’s Taiex slipped 0.3%.
Currency markets also reflected shifting investor expectations. The U.S. dollar ticked up slightly against the Japanese yen, climbing to 154.18 from 154.14. Anticipation that the Japanese government may delay fiscal tightening contributed to the yen’s weakness.
Commodities and Oil Prices Edge Higher
In energy trading, crude oil prices edged upward amid signs of continued global demand and geopolitical uncertainty. U.S. benchmark crude added 35 cents to $60.38 per barrel, while Brent crude, the international benchmark, climbed 43 cents to $64.49 per barrel.
These modest increases reflect cautious optimism about demand stabilization, though prices remain well below their highs earlier in the year.
Outlook: Investors Await Key Data and Fed Signals
Looking ahead, market participants will be closely watching for upcoming economic indicators, particularly inflation and retail sales reports, as well as commentary from Federal Reserve officials. While optimism about a soft landing persists, mixed corporate earnings and inflated tech valuations may inject more volatility in the short term.
With earnings season drawing to a close and the holiday season approaching, investors are preparing for lighter trading volumes but potentially sharper market reactions to any surprises — whether in data, Fed policy, or global developments.
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