The Fort Worth Press - Stocks drop as tech rally fades

A flood of multi-billion-dollar investment into artificial intelligence has been a key driver of the surge in mostly technology equities across the globe this year, sending valuations to record highs.

But there is increasing talk that tech-led gains may have gone too far and a painful correction could be on the way.

"Wall Street CEOs have also put investors on notice for a correction in the next 1-2 years," said Kathleen Brooks, research director at trading group XTB.

"It seems like the investment community has taken heed of this message," she added.

Briefing.com analyst Patrick O'Hare pointed to the more than nine percent drop in Palantir shares despite the US software firm beating expectations for its third quarter earnings and future guidance.

"Palantir, trading at close to 100 times sales, has been a poster child for valuation concerns," he said.

"Accordingly, the weak price action after yet another terrific earnings report has taken some wind out of the market's sails, acting as a sign to some that this stock and the market-cap-weighted market have gotten ahead of themselves." he said.

In the latest deals, Palantir launched a joint venture with the Dubai government's investment arm on Tuesday.

US chip-maker Nvidia and Deutsche Telekom, meanwhile, said a one-billion-euro ($1.1 billion) industrial artificial intelligence hub will soon be launched in Germany, Europe's latest bid to catch up in the global AI race.

This came a day after ChatGPT-maker OpenAI signed a $38 billion deal with Amazon's AWS cloud computing arm.

Wall Street opened lower on Tuesday, with the tech-heavy Nasdaq Composite dropping 1.5 percent.

All the "Magnificent 7" stocks -- Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla -- slid as trading started.

In Europe, the Paris and Frankfurt stock markets were down around one percent in afternoon trading Tuesday, while London slipped 0.4 percent.

The British pound retreated against the dollar after finance minister Rachel Reeves hinted at tax rises in a pre-budget speech.

That tracked a weak day in Asia, with Tokyo, Hong Kong and Shanghai stocks falling.

Cautious remarks from US Federal Reserve officials did little to provide support for further buying after the central bank's chief, Jerome Powell, indicated last week that a third rate cut this year was not definite.

Data on Monday indicated some further weakness in the US economy, with a key gauge of activity in the manufacturing sector contracting more than expected and for an eighth straight month in October as demand and output weakened.

In company news, shares in British energy giant BP were only up 0.3 percent after a drop in oil prices on Tuesday overshadowed its strong earnings report.

Crude prices shed around one percent as the market anticipated oversupply.

- Key figures at around 1430 GMT -

New York - Dow: DOWN 0.7 percent at 46,996.72 points

New York - S&P 500: DOWN 1.2 percent at 6,772.87

New York - Nasdaq Composite: DOWN 1.6 percent at 23,458.21

London - FTSE 100: DOWN 0.4 percent at 9,662.93

Paris - CAC 40: DOWN 0.9 percent at 8,039.44

Frankfurt - DAX: DOWN 1.2 percent at 23,852.57

Tokyo - Nikkei 225: DOWN 1.7 percent at 51,497.20 (close)

Hong Kong - Hang Seng Index: DOWN 0.8 percent at 25,952.40 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,960.19 (close)

Euro/dollar: DOWN at $1.1480 from $1.1518 on Monday

Pound/dollar: DOWN at $1.3044 from $1.3138

Dollar/yen: DOWN at 153.47 yen from 154.20 yen

Euro/pound: UP at 88.01 pence from 87.67 pence

West Texas Intermediate: DOWN 1.1 percent at $60.39 per barrel

Brent North Sea Crude: DOWN 1.0 percent at $64.27 per barrel

burs-rl/lth

H.M.Hernandez--TFWP