The Nasdaq Composite fell on Tuesday, giving back some of the prior session’s gains after a strong rally in artificial intelligence-linked names.
The tech-heavy index lost 0.4%, while the S&P 500 hovered around the flatline. The Dow Jones Industrial Average outperformed, rising 205 points, or 0.5%.
Sentiment was shaken by a report suggesting Meta Platforms may shift billions of dollars in spending toward Alphabet’s AI chips, pressuring Nvidia and introducing fresh volatility into a sector that has driven much of the market’s momentum this year.
Nvidia shares dropped more than 4% after The Information reported that Meta was considering a major investment in Alphabet-designed AI chips.
Alphabet stock rose more than 3% on the news, extending the previous session’s sharp gains.
The move highlighted the increasingly competitive landscape in high-performance semiconductors as companies expand their in-house or custom chip strategies to support AI workloads.
Market reverses after tech-fueled rally
Tuesday’s pullback followed a powerful rebound on Monday, when all three major US indices logged solid gains.
The S&P 500 rose about 1.6%, and the Nasdaq jumped 2.7% — its best performance since May 12 — as major tech names snapped a difficult stretch.
The Dow Jones Industrial Average added more than 200 points, or 0.4%.
Alphabet was a standout in Monday’s session, finishing 6.3% higher and notching a fresh record high.
Broadcom was the strongest performer in the S&P 500, rallying more than 11% as investors rewarded companies tied to application-specific chip innovation.
Despite the rebound, all three major indexes remain on track for a losing month.
Concerns about elevated tech stock valuations, particularly within the AI complex, have prompted investors to question whether markets will experience a year-end rebound or a further unwind in momentum.
The S&P 500 is down about 2% in November, the Nasdaq has declined 3.6%, and the Dow has shed 2.3%.
Fed cut expectations remain elevated
Traders continue to monitor developments that could influence the Federal Reserve’s December policy decision.
Markets are pricing in more than an 80% chance of a quarter-point rate cut next month, according to the CME FedWatch Tool.
Expectations surged after New York Fed President John Williams said Friday that there was room to lower rates “in the near term.”
On Monday, San Francisco Fed President Mary Daly added that she supports easing policy due to ongoing labour market concerns.
Fresh data from ADP showed private-sector labour conditions deteriorating further.
The payroll processor reported Tuesday that private companies have shed an average of 13,500 jobs per week over the past four weeks — a significant acceleration from the 2,500 weekly losses recorded in the prior update. With the government shutdown still hindering official data releases, alternative indicators have taken on added significance.
Treasury Secretary Scott Bessent said Tuesday he expects President Donald Trump to reach a decision on the next Federal Reserve chair by the holiday season.
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