Stocks slide as AI valuation fears bite; crypto and dollar add pressure
US equities sold off Tuesday as investors questioned whether AI-heavy names can deliver enough growth to justify premium multiples. The Nasdaq fell a little over 2%, the S&P 500 slipped about 1.2%, and the Dow lost roughly 0.5%.
Crypto joined the move lower. Bitcoin briefly broke below $100,000 to its weakest level since June, with liquidity worries resurfacing amid the ongoing government shutdown. A stronger US dollar added stress across risk assets.
What moved markets
- Valuation reset in AI leaders: Big bank CEOs signaled a likely correction if earnings fail to catch up with prices. Palantir dropped nearly 9% despite a solid print as the multiple did the damage. Nvidia slipped close to 4%.
- Mixed read-through from earnings: Uber posted strong results but still traded down, a sign the bar is high. After the bell, attention turns to AMD's update and the size/timing of its AI deals. Spotify and Supermicro are also in focus.
- Governance risk in the headlines: Norway's sovereign wealth fund said it will vote against approving Elon Musk's $1 trillion pay package. Tesla fell more than 5% ahead of Thursday's shareholder meeting.
- Macro headwinds: The US dollar index pushed higher, pressuring equities and commodities. Energy shares also eased on demand concerns.
- Crypto unwind: Bitcoin slid more than 6%, briefly under $100,000, as liquidity anxiety intersected with a risk-off tape.
Shutdown delays data, muddies the Fed read
The government shutdown reached day 35, tying the record and delaying key releases. The jobs report slated for this week is at risk, complicating how the Fed and markets assess growth and inflation in real time.
For reference, see the Bureau of Labor Statistics Employment Situation page for typical release details and methodology. BLS Employment Situation
Sector and single-name notes
- Technology led declines, with AI and software names absorbing the heaviest selling as multiples compressed.
- Consumer discretionary and industrials traded lower as investors took down cyclical exposure.
- Energy slipped alongside softer demand expectations and a firmer dollar.
- Ticker moves: PLTR -~9%, UBER lower despite a strong quarter, NVDA -~4%, TSLA -~5% ahead of its vote.
What finance teams can do now
- Re-underwrite AI names: Stress-test revenue trajectories and margins against current multiples. Map downside scenarios with normalized growth and higher discount rates; make sure position sizes match that risk.
- Plan post-earnings ranges: For AMD, SMCI, and other AI beneficiaries, define implied moves from options and pre-set add/trim levels. Be ready to act on guidance quality, not headlines.
- Tighten exposure and liquidity: Reduce crowded longs, balance nets, and consider collars on core positions. Revisit stop-loss discipline while depth is thin.
- Respect the dollar: If DXY stays firm, hedge FX where it impacts revenue translation and commodity inputs. Expect correlation spikes across equities, crypto, and cyclicals.
- Crypto treasury policy: If you hold BTC on balance sheet, set clear trigger levels around $100K, review custody and OTC lines, and avoid forced selling into gaps.
- Watch the near-term catalysts: AMD after the close, Tesla's shareholder vote Thursday, and any update on the shutdown and delayed data flow.
AI workflow resources for finance
If your team is benchmarking AI vendors or building internal tools, this curated list can speed up due diligence: AI tools for finance. It's a quick way to compare categories, use cases, and adoption paths.
Your membership also unlocks:
