Selloff Sweeps Global Markets

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Caitlin McCabe (0:18)

A global market sell-off intensifies as investors increasingly worry about an AI bubble. Plus, a house vote on releasing the full Epstein files is expected today. And your boss has a message, use AI or you're fired.

Lindsay Ellis (0:35)

In a few cases, we've seen organizations push out individuals who are not using artificial intelligence in their day-to-day work.

Caitlin McCabe (0:45)

It's Tuesday, November 18th. I'm Caitlin McCabe for The Wall Street Journal and here is the AM Edition of What's News. The top headlines and business stories moving your world today.

A global market selloff is continuing this morning with major stock indexes sliding across Asia and Europe. US stock futures are pointing lower and Bitcoin is also declining, falling below $90,000. Today's performance comes after the S&P 500 yesterday logged its largest three-day percentage decline since April, back when President Trump's trade war sent markets tumbling. This time, though, the culprit is stemming, at least partially, from fears that the AI frenzy that sent stocks soaring this year could be overdone. Journal reporter Hannah Miao joins me now from Shanghai to discuss this intensifying market route. Hannah, how bad is it out there?

Hannah Miao (1:44)

We're seeing a pretty brutal sell-off, not only some of the sharpest declines since April, as you mentioned, but we also saw the S&P 500 and NASDAQ fall below their 50-day moving averages for the first time in quite some time. And now this is a bit technical, but analysts often look at this as a gauge for where stocks go from here. So the longer-term momentum is now pointing in the negative direction. So it is foretelling that there could be more pain ahead, certainly a very volatile period in the markets currently.

Caitlin McCabe (2:17)

And so what are investors saying about what's driving this? How much of this is worries about an AI bubble versus other things like shifting expectations over a December interest rate cut?

Hannah Miao (2:30)

It definitely seems like this reconsideration of the AI boom is a big part of this. We're seeing investors take another look at a lot of the announced investments in building out AI infrastructure, realizing that a lot of it is being funded by debt, and wondering if the revenue that ultimately AI brings matches up with the money that's being spent in this sector. As there is a consideration of whether this is a bubble and investors are starting to sell these assets, a lot of these stocks are also moving in tandem downward. And we actually saw the CEO of Alphabet, the parent company of Google, Sunder Pichai, tell the BBC recently that if the AI bubble were to burst, no company would be immune, even his own company, Alphabet. So that just points to some of the worries out there about this massive reconsideration of the AI boom and how it could impact the broader tech sector. We've also been flying blind a bit in terms of economic data because of the government shutdown, investors haven't really had the regular economic releases that have been providing a temperature check for how the broader economy is doing. So now that we're expecting to get some of that government data coming in again, the September jobs report is coming out on Thursday, that is also leading to some worries about the broader economic situation and whether that matches up with how high the stock market has been flying this year.

Caitlin McCabe (4:11)

And Hannah, lastly, it's not just stocks that are being hit, right? What else are we seeing investors selling or buying right now?

Hannah Miao (4:19)

Yes, we've also seen Bitcoin take a hit. Bitcoin can often be correlated with some of these moves in the tech sector. It's seen as a risk asset, so it can kind of correlate with risk appetite. And we're also seeing that Wall Street's fear gauge, as it's called the volatility index, has also been at some of the highest levels since April. So generally, we're seeing a lot of uncertainty out there, volatility, even gold has taken a hit. So it's been pretty widespread. And we've seen this also hit Asian stock markets, European as well. So we're definitely seeing investors overall reconsider this current market moment.

Caitlin McCabe (5:02)

Well, it seems like there's a lot to watch out there this morning. That's Journal Reporter Hannah Miao. Thank you so much for joining us.

Hannah Miao (5:09)

Thank you.

Caitlin McCabe (5:10)

And if you're searching for clues on how the US economy is performing and what that could mean for your investments, check out the third episode of our Economic Indicators series. In it, we take a look at heavy truck sales and what clues they can give us on growth. That special episode is in your feed now, wherever you get your podcasts. Coming up, AI is coming for your job, but not the way you thought. That story and more after the break.