The S&P 500 is on track for a fourth consecutive decline as mounting concerns over Federal Reserve policy, shaky confidence in artificial intelligence valuations and a sharp downturn in Bitcoin weigh on global markets.
Key Takeaways:
The S&P 500 is heading for its fourth straight decline as Fed uncertainty, AI valuation fears and Bitcoin’s drop below $90,000 rattle markets. US stocks now trade at stretched valuations, with the S&P 500 at 22x forward earnings. Traders are bracing for Nvidia’s earnings and key labor data.Futures tied to the benchmark index slipped 0.4% early Tuesday in New York, pointing toward the longest losing streak since late August.
Nasdaq 100 futures also fell 0.4%, mirroring losses across Asian and European markets. Bitcoin added to the risk-off mood, briefly dropping below $90,000 for the first time in seven months.
AI Valuation Jitters and Shutdown Fears Drag Down US Stocks
US equities have been under pressure throughout November, with investors increasingly uneasy about whether the AI trade has pushed valuations too far.
The S&P 500 now trades at roughly 22 times forward earnings, well above its decade-long average of 19.
Sentiment has also been dragged lower by concerns surrounding the economic fallout from the longest US government shutdown on record.
“Appetite for AI is under pressure from circularity worries and bubble fears,” Ipek Ozkardeskaya, senior analyst at Swissquote, told Bloomberg on Tuesday.
“The bad news is that some of the more bullish vibes — AI enthusiasm, massive government stimulus, dovish central-bank expectations — are starting to fade.”
Despite the recent weakness, dip-buying has remained active. The S&P 500 managed to reverse sharp losses on Friday, recovering from a 1.4% slide to finish nearly flat.
Still, options data shows growing demand for bearish hedges in the tech sector, signaling a cooling of confidence in the sustainability of the recent rally.
The S&P 500 now sits about 3% below its October high and on Monday closed under its 50-day moving average for the first time since April, a level many traders view as a key marker of short-term momentum.
The next catalyst may arrive Wednesday when Nvidia reports quarterly earnings, a critical moment for assessing whether the AI trade still has fuel.
Meanwhile, swaps markets show traders reducing expectations for a Fed rate cut in December.
“We believe that the nervousness will persist until the September employment report provides greater clarity,” said Homin Lee, senior macro strategist at Lombard Odier.
“At the current juncture, a soft US labor market data or a large beat in Nvidia earnings could help.”
Bitcoin Crashes Below $90K as ETF Investors Face First Losses
Bitcoin plunged under $90,000 on Tuesday for the first time since April, erasing its entire 2025 rally and sending the average spot ETF investor into the red.
The drop pushed Bitcoin more than 30% below its early-October record, marking the first time ETF inflows, now sitting at a flow-weighted cost basis of about $89,600, have collectively turned negative.
The downturn triggered a wave of ETF outflows, with November 17 alone seeing $254 million exit US Bitcoin funds, led by large redemptions from BlackRock’s IBIT and GBTC.
Bitcoin dominance also slipped below 60% as Ether fell under $3,000 and major altcoins, including XRP, BNB, and Solana, posted losses of up to 5.6%, signaling broad market stress.
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