After Monday’s rally, US stocks opened mostly lower on lingering unease about the stratospheric valuation growth of major players in artificial intelligence (AI).
Those worries ebbed a bit as the session progressed, with some large tech equities finishing in positive territory.
However, the tech-heavy Nasdaq Composite was down 0.3%, the only one of the three main US indices to retreat.
“There’s definitely concern over valuations, but that valuations don’t mean the market’s going to sell off,” said Tim Urbanowicz of Innovator Capital Management, adding, “it just leaves a lot less room for bad news”.
Japan’s SoftBank announced it sold US$5.8 billion worth of shares in US chip giant Nvidia last month.
SoftBank did not give a reason for the Nvidia stock sale in its earnings statement.
Shares in Nvidia, whose processors are prized by companies training and operating AI models, fell 3%.
“For the wider investment community, when big investors cash out of their AI positions, they will take notice, and this is why the stock is declining today,” said Kathleen Brooks, research director at XTB trading group.
More broadly, Brooks said tech stocks were no longer providing market momentum.
“Without momentum helping US indices move higher, volatility could take hold, so we are not expecting stocks to move in a straight line for now, and the market correction may not be over,” she said in a note to clients.
Some market watchers viewed yesterday’s strong rise in the Dow as evidence of a rotation to industrial names from tech.
Investors have been cheered by the progress on legislation on Capitol Hill to reopen the government.
On Monday night, several Democratic senators broke ranks to join Republicans in a 60-40 vote passing legislation to reopen the government, which would trigger a release of US economic reports on labour, consumer prices and other key benchmarks in the coming weeks.
Tuesday’s session was held on Veteran’s Day, a US holiday, resulting in lower volumes than normal.
Europe’s main stock markets climbed yesterday.
London’s top-tier FTSE 100 index reached a fresh record high as a weakening pound boosted multi-nationals earning in dollars, while Paris won solid gains in a day that is also a public holiday in France.