US stocks extend selloff, gold resumes its climb as valuation worries weigh

NEW YORK - Wall Street stocks followed their European counterparts lower on Tuesday, extending a selloff prompted in part by the run-up to Nvidia earnings, which could test the artificial intelligence boom amid mounting valuation concerns.

All three major U.S. stock indexes pared losses by early afternoon but remained in negative territory, with crude, bitcoin and gold advancing and U.S. Treasury yields dipping as investor risk appetite soured. The S&P 500 was on track for its fourth straight daily loss, which has brought the bellwether index down about 2.8% since Nov. 12.

Chipmaker Nvidia’s quarterly results, expected on Wednesday, will be scrutinized for signs that the AI juggernaut, which has provided the muscle for much of the stock market’s recent rally, has staying power or whether the fervor surrounding the technology has created a bubble.

In other earnings, home improvement retailer Home Depot forecast a steeper than expected drop in annual profit, raising concerns about the housing market and the health of the American consumer.

“Investors are sensing that the tenor of the market has shifted,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “They don’t necessarily want to be too bullish on tech in case Nvidia doesn’t hit the ball out of the park.”

“We’re getting toward the end of a pretty good year, especially if you were a tech investor, and now you’re starting to see a bit of a pullback,” Carlson added. “(Investors) want to make sure that they protect their gains.”  

Official economic indicators that were unavailable during the longest government shutdown in U.S. history are being released, with the Commerce Department’s August report of new orders for U.S. factory-made goods gaining 1.4% as expected.

“It’s hard to put a lot of credence in the data that’s three or four months old now,” Tuz said. “We’re going into the end of a good year, and with these kind of conflicting data points, why not take a little bit off the table until the dust settles?”

WORLDWIDE SELLOFF DEEPENS

The Dow Jones Industrial Average fell 275.63 points, or 0.60%, to 46,312.97, the S&P 500 fell 17.34 points, or 0.26%, to 6,654.97 and the Nasdaq Composite fell 118.18 points, or 0.52%, to 22,589.89. 

European shares closed at a one-month low, with German stocks hitting a near five-month low as risk appetite continued to sour due to worries over tech valuations and dimming hopes for a December rate cut from the U.S. Federal Reserve.

MSCI’s gauge of stocks across the globe  fell 7.66 points, or 0.78%, to 980.15.

The pan-European STOXX 600 index fell 1.76%, while Europe’s broad FTSEurofirst 300 index fell 39.04 points, or 1.71%

Emerging market stocks fell 23.60 points, or 1.70%, to 1,364.25. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 1.86%, to 701.46, while Japan’s Nikkei fell 1,620.93 points, or 3.22%, to 48,702.98.

The yield on benchmark U.S. 10-year notes fell 1 basis point to 4.123%, from 4.133% late on Monday.

The 30-year bond yield rose 0.7 basis points to 4.7428% from 4.736% late on Monday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.7 basis points to 3.583%, from 3.61% late on Monday.

DOLLAR STEADIES, CRYPTO REBOUNDS, GOLD GAINS

The dollar touched a fresh 9-1/2-month high against the yen, but the dollar index steadied amid concerns of stretched stock valuations.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.01% to 99.56, with the euro down 0.05% at $1.1584.

Against the Japanese yen, the dollar strengthened 0.2% to 155.55.

Bitcoin reversed course, gaining 1.64% to $93,313.91 after dipping below $90,000, nearly 30% below its peak.

Ethereum rose 4.89% to $3,154.18.

Crude prices turned higher as investors assessed the impact of sanctions on Russian oil.

U.S. crude gained 1.39% to settle at $60.74 per barrel, while Brent settled at $64.89 per barrel, up 1.07% on the day.

Gold reversed its slide, turning losses to gains after touching a one-week low. 

Spot gold rose 0.83% to $4,077.82 an ounce. U.S. gold futures fell 0.12% to $4,063.40 an ounce.

(Reporting by Stephen Culp; Additional reporting by Scott Murdoch and Lucy Raitano; Editing by Bill Berkrot and Nick Zieminski)