Global stock markets experienced a sharp decline on Thursday, following a major sell-off on Wall Street the previous day. The downturn was primarily fueled by disappointing earnings reports from tech giants like Alphabet and Tesla, which dampened investor enthusiasm around artificial intelligence (AI) technologies.
The US stock market suffered its worst losses since 2022, with the S&P 500 plunging 2.3%. The tech-heavy Nasdaq Composite was hit even harder, falling 3.6%. This marked the end of the longest period without a 2% drop since the 2008 financial crisis.
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The sell-off reverberated across global markets, with major Asian and European indices also experiencing significant declines. Japan’s Nikkei 225 index plummeted 3.3%, while the UK’s FTSE 100 and France’s CAC 40 each fell over 1%.
Investors were particularly spooked by Alphabet’s report of higher-than-expected spending on AI initiatives, as well as Tesla’s disappointing profit report and delay of its robotaxi service. These developments raised concerns about the sustainability of the recent AI-driven rally in tech stocks.
Analysts suggest that the market correction was overdue, given the rapid rise in valuations over the past few months. The pullback is seen as a healthy development, allowing investors to reassess the market’s fundamentals and adjust their expectations.
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However, the sell-off also highlights the risks associated with the current market environment, which is characterized by high valuations, geopolitical tensions, and ongoing concerns about inflation. Investors are advised to exercise caution and diversify their portfolios to mitigate potential losses.
Despite the current volatility, many analysts remain optimistic about the long-term prospects of the stock market. They believe that the underlying economic fundamentals remain strong, and that the recent sell-off presents a buying opportunity for long-term investors.
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