Volkswacht Bodensee - Stocks fall on renewed AI bubble fears

Wall Street opened lower, with shares in US chips designer Nvidia down 1.6 percent and fellow tech giant Palantir shedding 0.5 percent after a selloff the previous day.

"It's one thing for equity markets to suffer a general pullback, as happened during the Trump Tariff Tantrum in April," said David Morrison, analyst at Trade Nation financial services firm.

"But it's quite another to see stocks at the vanguard of AI development getting trashed. What adds to concerns is that there has been no obvious catalyst for the selloff," he added.

Massive investments in artificial investments have fuelled a tech rally this year, but some investors fear the valuations are now far too high, sparking a selloff this week.

"Some analysts warn that this year's artificial-intelligence-led rally has finally come to a halt," said Forex.com analyst Fawad Razaqzada.

"Others suggest markets needed to cool down anyway with indices racing to record highs without much pause and new stimulus," he added.

Investors were also rattled by a report from outplacement firm Challenger, Gray & Christmas showing US layoffs hit the highest level in 22 years last month.

The report found that this year had been the worst for layoffs since 2020, when the labour market was decimated by the pandemic.

Investors have been forced to use private data as a guide to the state of the world's biggest economy because the longest-running US government shutdown has closed numerous departments.

The shutdown also forced the cancellation of hundreds of flights on Friday after President Donald Trump's administration ordered reductions to ease the strain on air traffic controllers who are working without pay.

While the latest jobs figures came a day after news that private hiring had increased, it sparked fresh concerns about the labour market and put pressure on the Fed to cut borrowing costs for a third successive meeting in December.

However, comments from central bank officials suggested another reduction was not certain, echoing boss Jerome Powell's warning last week.

Fed Cleveland chief Beth Hammack said she remained "concerned about high inflation".

Chicago Fed boss Austan Goolsbee told CNBC he was concerned about making decisions during the shutdown without full data.

Markets were also pressured by official data showing China's exports fell in October for the first time in eight months as trade tensions flared in the weeks before Chinese President Xi Jinping and Trump reached a detente.

London's top-tier FTSE 100 index was dragged down by heavy losses to share prices of online property business Rightmove and British Airways owner IAG. They dropped 13 and eight percent respectively following earnings updates that undershot market expectations.

- Key figures at around 1430 GMT -

New York - Dow: DOWN 0.4 percent at 46,705.12 points

New York - S&P 500: DOWN 0.5 percent at 6,687.89

New York - Nasdaq Composite: DOWN 0.7 percent at 22,886.73

London - FTSE 100: DOWN 0.9 percent at 9,644.01

Paris - CAC 40: DOWN 0.4 percent at 7,933.60

Frankfurt - DAX: DOWN 1.0 percent at 23,506.30

Tokyo - Nikkei 225: DOWN 1.2 percent at 50,276.37 (close)

Hong Kong - Hang Seng Index: DOWN 0.9 percent at 26,241.83 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,997.56 (close)

Euro/dollar: UP at $1.1571 from $1.1548 on Thursday

Pound/dollar: UP at $1.3138 from $1.3135

Dollar/yen: UP at 153.37 yen from 153.04 yen

Euro/pound: UP at 88.08 pence from 87.91 pence

Brent North Sea Crude: UP 0.9 percent at $63.92 per barrel

West Texas Intermediate: UP 1.0 percent at $60.02 per barrel

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I.Stoeckli--VB