Tech giants get hammered in Nvidia-led stock slide

A selloff in the world’s largest technology companies drove stocks toward their longest slide since August, underscoring the American market’s narrow reliance on a handful of growth giants.

Equities extended their drop into a fourth straight day, with the S&P 500 down over 1%. Ahead of Nvidia Corp's results, the shares sank 3%. The bar keeps getting higher for the chipmaker and its fellow megacaps to convince investors that the billions of dollars spent on artificial intelligence will pay off. Its outlook could have significant implications for markets due to the firm’s massive influence on major indexes.

Pressure is rising on financial markets more broadly as investors reassess the outlook for economic growth at a time when tech behemoths continue to spend heavily on AI. Microsoft Corp and Nvidia are committing to invest up to a combined $15 billion in Anthropic PBC, in a move that ties the AI developer closer to two of the biggest backers of its rival OpenAI.

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Valuations in the booming AI industry are due for a reassessment, according to JPMorgan Chase & Co. Vice Chairman Daniel Pinto, who warned that any decline would reverberate across the stock market.

"There is probably a correction there,” Pinto said at the Bloomberg Africa Business Summit in Johannesburg on Tuesday. “That correction will also create a correction in the rest of the segment, the S&P and in the industry.

Investors’ cash positions dropped below a critical threshold in a monthly Bank of America Corp. survey, triggering a so-called sell signal for equities. With investor exposure to equities still the highest since February in the BofA survey, strategist Michael Hartnett said the market would “correct further” without a rate reduction next month. Positioning is now “a headwind, not a tailwind for risk assets,” he noted.



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The S&P 500 hovered near 6,600. A gauge of tech megacaps lost 2.5%. Bitcoin briefly dropped below $90,000 before bouncing. The yield on 10-year Treasuries slid five basis points to 4.09%. The dollar wavered.