Strong business updates from major U.S. companies were expected to soothe anxious financial markets, but instead they failed to halt a deepening slide in global stocks. Despite robust earnings from Nvidia and Walmart, stronger-than-expected hiring in September, and an uptick in home sales, investor concerns continued to dominate sentiment. On Thursday, the market rally that began in early trading quickly reversed. Resulting in S&P 500 falling 1.5%, the Dow losing 0.8%, and the Nasdaq dropping more than 2%. The downturn rippled across Asia the following day, where major indexes also suffered losses, including steep declines in Japan, South Korea, and Hong Kong.
Nvidia, whose impressive results initially boosted confidence in the AI sector, saw its shares fall more than 3% by the end of Thursday’s session. Analysts highlighted this disconnect as a sign that investors remain unsettled, especially regarding fears of an ongoing AI bubble. Concerns about overheated valuations drove down not only tech stocks but cryptocurrencies as well, with Bitcoin falling below $90,000 to its lowest level since April. Even though Nvidia’s CEO Jensen Huang dismissed anxiety about overvaluation, market strategists said apprehension persists, particularly because gains in the S&P 500 have been driven overwhelmingly by a concentrated group of tech giants known as the “Magnificent Seven.” Their dominance, representing roughly one-third of the index, has made markets especially vulnerable to swings in momentum.
Effect around the world
Asian markets followed Wall Street’s retreat, with Japan’s Nikkei 225 dropping 2.4% and major tech companies like SoftBank plunging nearly 11%. South Korea’s Kospi closed almost 4% lower, and major chipmakers such as SK Hynix and Samsung saw sharp declines. Alphabet CEO Sundar Pichai added to the cautious tone earlier this month, warning that aspects of the AI boom were showing signs of “irrationality.” Some analysts emphasize that the downturn may be a normal correction rather than the start of a broader collapse. But they also acknowledge that it is too early to declare the end of the AI investment surge.
Uncertainty about the U.S. Federal Reserve’s next steps on interest rates has added further pressure. Investors are waiting for delayed inflation data to signal whether the Fed might continue cutting rates into the next year. Meanwhile, mixed labor market figures, 119,000 jobs added in September alongside a rise in unemployment from 4.3% to 4.4%, have provided little clarity. Analysts say the ambiguity leaves investors unsure about whether rate cuts are still on track for December or into 2026.
Market strategists caution that a combination of AI bubble fears and renewed inflation anxiety could fuel more volatility in the coming weeks. As one analyst noted, the current environment requires both stable inflation and strong AI-driven growth to sustain stock market highs. With both factors coming into question recently, markets appear increasingly fragile, and investors are bracing for more turbulence ahead.
Reference
Kaye, D. (2025, November 21). US and Asia stocks slide as AI jitters persist. https://www.bbc.com/news/articles/cwy1yl1202yo