Markets Slip Again as AI Frenzy Cools and Retail Warnings Mount

U.S. equities extended their losing streak for a second straight day as investor concerns over stretched AI valuations and mixed corporate news weighed on sentiment. The Dow and S&P 500 logged a fourth consecutive daily decline, with the Dow falling over 500 points. Tech weakness, particularly in AI-leaders Nvidia and Microsoft, led markets lower, while retail disappointments and cautious outlooks added to the negative tone. Bond yields were steady, while oil and gold saw modest gains.

Key Headlines & Market Movers:

• AI Momentum Stalls Ahead of Nvidia Earnings: Nvidia shares slipped another 2% as investors brace for its earnings release after Wednesday’s close, despite announcing major strategic deals with Microsoft and Anthropic. The partnerships, which include multibillion-dollar investments and cloud infrastructure commitments, highlight the ongoing AI arms race, but also underscore the high expectations baked into current valuations.

Home Depot Warns on the Consumer: Home Depot dragged on the Dow, falling 6% after missing Q3 profit estimates and trimming its full-year forecast. The results raised fresh concerns about consumer spending trends, especially in the home improvement space. Eyes now turn to upcoming earnings from Lowe’s, Target, TJX, and Walmart for broader sector read-through.

• Microsoft, Amazon Face Pressure on Downgrades: Microsoft and Amazon shares fell 2.7% and 4.4%, respectively, after ratings downgrades from Rothschild. Despite their involvement in AI-related partnerships, concerns over valuation and margin pressures may be leading analysts to temper expectations, reinforcing the theme of tech exuberance being re-evaluated.

Cloudflare, Alphabet, and Meta in the Spotlight: Cloudflare shares dropped nearly 3% due to an outage impacting major platforms including ChatGPT and X. Alphabet slipped 0.3% after initially rallying on news of Berkshire Hathaway’s stake and the release of its new AI model, Gemini 3. Meta, though victorious in an FTC antitrust trial, also closed lower, underscoring that positive headlines weren’t enough to lift sentiment.

S&P 500 Sector Performance

Looking Ahead

Markets will be closely watching Nvidia’s earnings for signs of sustainable growth amid high AI expectations. Retail results from Lowe’s, Target, and TJX on Wednesday, followed by Walmart on Thursday, could provide further clarity on the health of the U.S. consumer. With macro data light, corporate earnings and sector-specific developments are likely to drive near-term sentiment.

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