Daijiworld Media Network – New York

New York, Nov 21: Stocks across the globe fell sharply after a brief Nvidia Corp.-led rally, as renewed worries over the artificial intelligence sector and stretched valuations prompted investors to retreat from riskier assets. Bitcoin also slipped, trading around $87,000 after dipping below that level for the first time since April.

In Asia, South Korea’s Kospi Index, a bellwether for AI enthusiasm, plunged as much as 4.1%, heading for its worst week since early March. Japan’s Topix faced its largest weekly drop since April amid rising volatility, particularly in technology stocks. Meanwhile, all eyes were on Japan’s upcoming government stimulus package. The yen remained steady against the dollar, with Finance Minister Satsuki Katayama noting that currency intervention could be considered if the yen moves excessively.

The market reversal came after Nvidia’s upbeat forecast failed to sustain the tech rally, with the company’s shares sliding 3.2%. Investor concerns were compounded by uncertainty over whether the Federal Reserve would cut interest rates next month, as policymakers signaled caution over easing too soon.

“We’re at a ‘show me’ point,” said Martin Schulz, head of international equities at Federated Hermes. “Global equities have had a strong run despite tariff tensions, regional conflicts, and slowing growth. Now corporations need to deliver on earnings.”

The S&P 500 recorded its largest intraday reversal since the peak of tariff turmoil in April, dropping 3.6% before settling lower. The index has fallen 5% from its most recent peak. Historically, similar reversals have often been followed by gains in the subsequent day, week, and month, according to Goldman Sachs.

Into the Asian trading session, sentiment stabilised slightly, with S&P 500 and Nasdaq 100 futures edging up 0.2%. Treasury yields, which rose across the curve in the previous session, gave up some gains, with the 10-year yield rising one basis point to 4.09%. The Cboe Volatility Index reached 28, indicating elevated but not extreme volatility.

The swings coincided with the approaching expiration of an estimated $3.1 trillion in options contracts on Friday. Meanwhile, the long-delayed US employment report showed steady job growth in September, though unemployment edged higher, suggesting a stabilising labor market ahead of the government shutdown.

Fed officials maintained a cautious tone. Governor Michael Barr noted the need for prudence in cutting rates while inflation remains above target. Cleveland Fed President Beth Hammack warned that lowering rates could prolong above-target inflation, and Chicago Fed President Austan Goolsbee expressed hesitancy over a December rate cut.

“Investor concerns over valuations, combined with a mixed jobs report, dominated sentiment,” said Nick Twidale, chief market analyst at AT Global Markets, Sydney. “We appear to be in a ‘sell rallies’ environment, and the top may be in for the rest of the year.”