US Stock Market Down Today: Tech and AI Sell-Off Drives Dow, S&P 500, Nasdaq Lower
The Dow Jones Industrial Average dropped 212 points, or 0.5%, while the S&P 500 fell 0.7% and the Nasdaq Composite slipped 0.9%, as per a CNBC report.
Palantir Technologies was at the center of the sell-off, losing 7% despite beating Wall Street’s third-quarter revenue and earnings estimates, as per the report. The data analytics software company expects $1.33 billion in revenue for the current period, surpassing analysts’ $1.19 billion forecast and revenue in the prior quarter had jumped 63%, as per the CNBC report.
Deutsche Bank strategist Jim Reid, said that, “Their results were good but markets were disappointed at the lack of company visibility for the whole of 2026,” and he also alluded to valuation concerns around Palantir, as reported by CNBC. Palantir’s shares, which have surged about 150% this year, now trade at more than 200 times forward earnings, with the price-to-earnings ratio approaching 700, as per the report.
High AI Stock Valuations Drive Market Caution
Other AI and tech stocks also faced pressure. Oracle, which has gained 50% this year with a current P/E of 60, fell more than 1%, as per the report. Chipmaker AMD, up more than 100% year-to-date with a P/E of 149, dropped over 4%, while Nvidia and other AI leaders also retreated, as per the CNBC report.The strong performance of AI stocks has pushed the S&P 500’s forward P/E ratio above 23, levels not seen since 2000, as per the report. Analysts warn that such concentrated gains in a few mega-cap tech companies mask broader market weaknesses. Adam Crisafulli of Vital Knowledge highlighted that, “Our biggest complaint about U.S. equities is the extremely disjointed state of breadth, whereby a handful of tech mega-caps have masked some significant red flags beneath the surface,” as quoted by CNBC.ALSO READ: Investors stunned as Palantir erases all gains, $60 billion market cap swing in hours – what really happened?
Wall Street Signals Potential Market Corrections
Adding to investor caution, Wall Street executives signaled potential near-term market corrections. Goldman Sachs CEO David Solomon suggested there could be a 10% to 20% drawdown in equities over the next 12 to 24 months, while Morgan Stanley CEO Ted Pick said 10% to 15% drawdowns should be considered a normal market development rather than a crisis, as per the CNBC report.
Treasury Yields and Oil Prices Reflect Economic Uncertainty
Treasury yields edged slightly lower, with the 10-year note at 4.1% and the 2-year at 3.59%, reported Barron’s. Crude oil prices also fell more than 1%, hinting at economic growth concerns amid the ongoing US government shutdown.
Bespoke Investment Group co-founder Paul Hickey pointed out that, “Even with the sharp decline in equities, bond yields are only modestly lower as the 10-year yield still hangs around 4.1%,” adding, “Crude oil prices are also down more than 1%, which suggests that investors are also concerned about the health of the economy, given the ongoing shutdown,” as quoted by Barron’s.
Experts Call Today’s Stock Market Decline a ‘Market Wake-Up Call’
Mizuho’s Jordan Klein described the stock market’s drop as a “Market Wake Up Call” in the title of his latest note, and argues it should be no surprise why stocks are selling off, saying, “Does anyone who has been watching this stock market since April lows really need to ask that question?” as quoted by Barron’s. Klein added, “Or better yet, do we really need the CEO’s or two of the largest and most respected investment banks to tell us all that this market will have some form of a correction over the next 24 months? TWO YEARS!!! Doesn’t that go without saying after Tech and AI stocks are up one million percent?” as quoted in the report.
FAQs
Why did the Dow, S&P 500, and Nasdaq fall today?
Tech and AI stocks like Palantir, AMD, and Nvidia saw sharp declines, raising concerns about high valuations, as per the CNBC report.
Why are AI stocks under pressure despite strong growth?
Many are trading at extremely high P/E ratios, making investors cautious about how much further prices can rise, as per the CNBC report.
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