Nvidia, bitcoin and other shooting stars drag US stock market down

NEW YORK (AP) — The U.S. stock market plunged Monday as Nvidia and other superstars created by the frenzy around artificial intelligence technology weakened further.

The S&P 500 fell 0.9% and moved further away from its all-time high set late last month. The Dow Jones Industrial Average fell 557 points, or 1.2%, and the Nasdaq composite sank 0.8%.

Nvidia was the heaviest weight in the market, as it has often been in its recent tumultuous weeks. The chip company fell 1.8%, while losses for other AI winners included a 6.4% drop for Super Micro Computer.

Other areas of the market that had had strong momentum also tanked. Bitcoin fell below $92,000, down from nearly $125,000 last month, for example. That helped drag Coinbase Global down 7.1% and Robinhood Markets down 5.3%.

Critics have been warning that the U.S. stock market could be set for a crash because of how high prices have soared since April, making them look overpriced. Critics point in particular to stocks swept up in AI mania, which have been rising at spectacular speeds for years.

Even with Monday’s loss, Nvidia is still up 39% year to date after doubling its price in four of the last five years.

That will be the focus of Wall Street on Wednesday, when Nvidia will report how much profit it made over the summer. AI stocks have risen so much on expectations that they will deliver huge earnings growth. If they fail to beat analyst expectations, that would undermine one of the great assumptions that has led the US stock market to record highs.

Such high expectations extend beyond tech stocks, even if they’re tougher for AI favorites.

Aramark fell 5.2% after the company reported a profit for the latest quarter that missed analysts’ expectations. The company, which provides food and facilities management for schools, national parks and convention centers, also said it expects an underlying measure of earnings to grow between 20% and 25% this coming year. While relatively strong, it was weaker than analysts had predicted.

That helped offset a 3.1% rise for Alphabet. It jumped after Berkshire Hathaway said it had acquired a $4.34 billion stake in Google’s parent company. Berkshire Hathaway, run by famed investor Warren Buffett, is known for trying to buy stocks only when they appear to be a good value and avoiding anything that seems too expensive.

In total, the S&P 500 fell 61.70 points to 6,672.41. The Dow Jones Industrial Average fell 557.24 to 46,590.24, and the Nasdaq composite sank 192.51 to 22,708.07.

Another potential source of disappointment for Wall Street is what the Federal Reserve does with interest rates. The expectation was that the Federal Reserve would continue to cut interest rates in hopes of propping up the slowing labor market. Wall Street loves lower rates because they can give a boost to the economy and investment prices.

But doubts are emerging about whether a third cut for the year will be made at the Federal Reserve’s next meeting in December, something traders had previously seen as highly likely. The downside to lower interest rates is that they can make inflation worse, and inflation has remained stubbornly above the Federal Reserve’s 2% target.

Fed officials have also pointed to the U.S. government shutdown, which delayed the release of updates on the labor market and other signals about the economy. With less information and less certainty about how things are going, some Fed officials have suggested it may be better to wait until December for more clarity.

Now that the shutdown is over, the government is preparing to release the delayed September jobs report on Thursday. That could create more changes in the market. Very strong data would likely hold back the Fed’s decision to cut rates, while very weak data would raise concerns about the economy.

In 2026, the Federal Reserve is likely to cut interest rates only in response to a slowing economy rather than trying to get ahead of it, according to Barry Bannister, chief equity strategist at Stifel. That’s not such a good environment for stock prices, and Bannister said “the Fed’s ‘free lunch’ is over.”

In the bond market, the 10-year Treasury yield fell to 4.13% from 4.14% last Friday.

In foreign stock markets, indices fell modestly in much of Europe and Asia.

Tokyo’s Nikkei 225 fell 0.1% after the government reported that the Japanese economy shrank at an annual rate of 1.8% in the July-September quarter.

South Korea’s Kospi was an outlier, jumping 1.9% as technology-related stocks performed well.

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AP Business writers Matt Ott and Elaine Kurtenbach contributed.