Wall Street Slides as Fears Grow Over Market Bubble
Sovereign debt remains a growing concern, as widening fiscal deficits combined with elevated interest rates are creating vulnerabilities.
Quick overview
- U.S. stocks fell on Thursday, with all three major indexes ending lower amid concerns over high market valuations.
- The Dow Jones dropped 0.84%, the S&P 500 declined 1.12%, and the Nasdaq Composite sank 1.90%, led by weakness in technology stocks.
- Despite the overall decline, Snap shares surged 9.73% after reporting strong quarterly results and a new AI partnership.
- Analysts highlighted three economic concerns: the speculative nature of the cryptocurrency market, risks associated with the AI boom, and growing vulnerabilities from sovereign debt.
U.S. stocks fell on Thursday, extending the selloff in tech shares as investors grew increasingly uneasy about lofty market valuations.
All three major Wall Street indexes ended lower. The Dow Jones Industrial Average, composed of 30 blue-chip companies, dropped 0.84% to 46,912.30 points. The S&P 500, which tracks the most valuable U.S. firms, declined 1.12% to 6,720.32, while the tech-heavy Nasdaq Composite sank 1.90% to 23,053.99.
The weakness in technology stocks — particularly those linked to artificial intelligence — served as a sharp reminder of Wall Street’s heavy dependence on the sector after months of record highs fueled by AI optimism.
Six of the S&P 500’s 11 main sectors finished lower, with technology (-1.08%) leading declines. Within the Dow, Salesforce (-5.31%), Nvidia (-3.65%), and Amazon (-2.84%) weighed on the index.
Defying the broader trend, Snap shares surged 9.73% after the company reported strong quarterly results and unveiled a major new partnership in artificial intelligence.
The Three Economic “Bubbles”
Analysts pointed to three areas of concern in the global economy.
First, the cryptocurrency market remains highly speculative and could face a major pullback if sentiment shifts.
Second, the AI boom — while promising for productivity — also poses risks, particularly the displacement of white-collar jobs in major cities. Companies like Amazon and Nestlé have already announced layoffs in those categories.
Finally, sovereign debt remains a growing concern, as widening fiscal deficits combined with elevated interest rates are creating vulnerabilities that could trigger financial stability risks.
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