Stocks pull back after recent rally; dollar gains
NEW YORK :Major stock indexes declined on Tuesday, with chip stocks lower as chief executives at Goldman Sachs and Morgan Stanley cautioned that equities could be heading for a pullback, while the dollar climbed to a four-month high against the euro.
U.S. Treasury yields dipped on risk-off sentiment, which also helped to support the dollar.
The bank CEOs warned at an investment summit in Hong Kong of the prospect of a stock market correction of more than 10 per cent over the next two years.
Shares of Nvidia were down more than 2 per cent early, while an index of semiconductors also was down about 2 per cent.
Shares of Palantir Technologies were down more than 7 per cent despite the company reporting strong quarterly results. The company, which has more than doubled in value this year, forecast fourth-quarter results above market expectations, driven by a rapid AI adoption boosting demand for its data analytics services.
"Big Short" investor Michael Burry, known for his successful bets against the U.S. housing market in 2008, has now placed bearish bets on Nvidia and Palantir, according to a regulatory filing on Monday.
The Nasdaq was down more than 1 per cent, leading declines among the three major U.S. stock indexes. The Nasdaq is still up nearly 22 per cent for the year so far.
"The market's been moving higher as warranted from an earnings standpoint, but at some point...it seemed like it was kind of positioning for a risk-off pullback even on the slightest disappointment," said Keith Buchanan, senior portfolio manager at Globalt Investments.
The Dow Jones Industrial Average fell 190.95 points, or 0.40 per cent, to 47,147.49, the S&P 500 fell 54.48 points, or 0.80 per cent, to 6,797.49 and the Nasdaq Composite fell 316.86 points, or 1.33 per cent, to 23,517.86.
MSCI's gauge of stocks across the globe fell 8.53 points, or 0.84 per cent, to 999.38.The pan-European STOXX 600 index fell 0.42 per cent.
Earlier, Asian shares tumbled from all-time highs.
Stocks gained Monday following Amazon's $38 billion cloud services deal with ChatGPT creator OpenAI.
The U.S. dollar was underpinned in part by reduced bets for near-term Federal Reserve easing, with divisions within the Fed raising doubt about the prospect of another rate cut this year.
The Fed lowered rates last week but Chair Jerome Powell said a December rate cut was not a foregone conclusion. Traders now price a 65 per cent chance of a rate cut in December, compared with 94 per cent a week earlier, CME FedWatch showed.
The euro fell for the fifth straight session and was down 0.3 per cent at $1.148, its weakest since August 1. Against the yen, the dollar was 0.5 per cent lower, though the Japanese currency remained near a recent 8-1/2-month low.
Sterling tumbled after the UK finance minister pointed to "hard choices" in her upcoming budget. Sterling weakened 0.72 per cent to $1.3044.
Cryptocurrency bitcoin was down 2 per cent to $107,486, its weakest since June.
U.S. Treasury yields declined amid a broader risk-off tone in financial markets.
Because of the government shutdown, a closely watched monthly jobs report from the Bureau of Labor Statistics will not be available on Friday, as previously scheduled.
The yield on benchmark U.S. 10-year notes fell 2.6 basis points to 4.081 per cent, from 4.107 per cent late on Monday.
U.S. crude fell 0.64 per cent to $60.66 a barrel and Brent fell to $64.50 per barrel, down 0.6 per cent on the day. Spot gold fell 0.67 per cent to $3,975.00 an ounce.
(Additional reporting by Reporting by Twesha Dikshit, Purvi Agarwal and Johann M Cherian in Bengaluru and Lucy Raitano in London and by Kevin Buckland in Tokyo. Editing by Sam Holmes, Mark Potter and Sharon Singleton)
