US stocks fell on Tuesday as rising anxiety over an AI bubble and concerns surrounding the health of the US economy pressured major indexes for a fourth straight session. Investors braced for a pivotal earnings report from Nvidia, as well as key labor data delayed by the government shutdown, setting the stage for a tense week on Wall Street.
The Dow Jones Industrial Average fell nearly 0.9%, extending its worst three-day stretch since April. The Nasdaq Composite dropped close to 1%, dragged lower by a sharp pullback in Big Tech, while the S&P 500 slipped roughly 0.7% as broad risk-off sentiment took hold. Bitcoin’s brief slide below $90,000 added another layer of volatility, reinforcing the overall defensive tone.
Market Movers:
- Axalta (AXTA) +13%: Axalta soared after announcing an all-stock merger with Akzo Nobel that will create a $25B global coatings powerhouse. Investors welcomed the substantial cost synergies and expanded footprint across more than 100 brands and nearly 200 manufacturing sites.
- Amer Sports (AS) +8%: The stock jumped on robust quarterly results that beat expectations and pushed full-year guidance higher. Strong global demand for Salomon and Arc’teryx drove double-digit growth across all product lines.
- Medtronic (MDT) +5%: Medtronic rallied after posting better-than-expected revenue and raising its full-year forecast. Its cardiovascular division posted its fastest organic growth in more than a decade, easing concerns about slowing procedure volumes.
- LifeMD (LFMD) –25%: LifeMD dove after issuing weak Q3 results and slashing full-year revenue guidance following a major divestiture. The reset underscored challenges facing telehealth operators as competition intensifies.
- Ceva (CEVA) –6%: Ceva dropped after announcing a public stock offering that will raise cash for acquisitions and general corporate needs. The dilution weighed on shares despite the company’s plan to expand strategic capabilities.
- Blue Owl Capital (OWL) –2%: The stock slipped after pausing redemptions from a $1.8B private BDC ahead of its merger with the larger public OBDC. The temporary freeze added new pressure to the stock.
AI Bubble Concerns Dominate Sentiment
Fears of an AI bubble grew after a Bank of America survey found that nearly half of fund managers now view an AI-driven crash as the market’s biggest tail risk. That shift marked one of the steepest jumps in risk perception this year, highlighting just how quickly the narrative around AI has turned from overall optimism to cautious reevaluation.
Even as AI spending is boosting productivity, managers warned that companies may be over-investing in capex — a reversal from the cloud-computing boom of the 2010s, where early investments yielded far clearer returns. This tension has raised pressure on Nvidia’s results, which now serve as the market’s compass on AI’s near-term path.
Housing Market Strain Adds to Macro Headwinds
Homebuilder sentiment worsened in November, with a record 41% of builders cutting prices to entice hesitant buyers. The discounting, the highest share on record, showcases the pressure from stubborn mortgage rates, skittish consumers, and ongoing uncertainty around tariffs and construction costs.
Even with incentives rising, confidence in single-family homebuilding remains solidly negative. Builders continue to scale back new starts for 2025, though economists expect a modest rebound next year as future sales expectations stabilize.
Retail Earnings and Labor Data Take Center Stage
Retail performance is becoming a key focal point for gauging consumer health. Home Depot’s weak quarter put added weight on upcoming results from Walmart and Target, both of which will offer critical insight into holiday-season spending patterns.
On the labor front, Wall Street is preparing for the long-delayed September jobs report — the first major economic data release since the shutdown disrupted the flow of key indicators. With rate-cut odds now split roughly 50-50, even small deviations from expectations could shift the Fed outlook meaningfully.
Looking Ahead
Markets enter the back half of the week on edge, with Nvidia’s earnings and Thursday’s jobs data poised to deliver pivotal clues about the future of both the AI trade and the broader economy. If Nvidia reassures investors that AI demand remains durable, tech could regain its footing, but any sign of cooling momentum may deepen the sell-off.
For now, the risk-off tone remains firmly in place as investors navigate uncertainty in everything from the consumer outlook to the trajectory of interest rates. Volatility is likely to stay elevated, and markets may continue searching for direction until the week’s big catalysts land.