The BareStory
U.S. stock markets experienced a broad decline in trading on Tuesday, November 18, as the price of Bitcoin also fell. The downturn was linked to growing investor caution regarding the technology sector, particularly artificial intelligence. Major stock indices saw drops of over 1%, while Bitcoin briefly hit its lowest price since April.
During Tuesday's session, the S&P 500 fell 1.2%, the Dow Jones Industrial Average dropped 1.2%, and the Nasdaq Composite declined 1.6%. A key factor was AI chipmaker Nvidia, whose stock fell 3.2%, bringing its loss for the month to nearly 11%. The company is expected to release its third-quarter financial results on Wednesday. Despite the session's decline, the S&P 500, Dow, and Nasdaq remain up for the year by over 12%, 8%, and 15% respectively.
Bitcoin's price briefly fell to $89,259 before recovering to trade at approximately $93,246. The cryptocurrency has been on a downward trend since reaching a record high above $126,000 in early October. Mike O’Rourke, chief market strategist at Jones Trading, stated that the correlation between the sell-off in bitcoin and technology stocks was "undeniable." He described the stock index taking cues from the smaller cryptocurrency market, noting that the tech-heavy Nasdaq-100 index has fallen over 4% this month following a downturn in crypto.
Investor sentiment appears to reflect this apprehension. A recent monthly survey of global fund managers indicated that 45% of respondents identified a potential "AI bubble" as a top low-probability, high-damage risk. According to the survey, the highest net percentage of investors in 20 years believe companies are currently "overinvesting," fueling concerns that significant spending on AI chips and data centers may not deliver the anticipated profitable outcomes.
How it may affect me
As a U.S. reader:
• The value of retirement plans and personal investments may see a short-term decline, as major stock indices like the S&P 500 fell over 1%.
• For those holding cryptocurrency, the value of their assets has likely decreased, with Bitcoin’s price dropping significantly following a downward trend from a recent record high.
• Investor caution about an "AI bubble" could slow funding in the sector, potentially delaying the development of new AI-driven products and services for consumers.
