Yahoo Financeยท2025-10-20 14:20Market Overview - The Dow Jones Industrial Average experienced a significant drop of 508 points, or 22.6%, on October 19, 1987, known as Black Monday, which would equate to nearly 11,000 points today [1] - Concerns prior to the market retreat included U.S. trade deficits, rising interest rates, and discussions in Congress regarding M&A tax rates [2] - The market's overvaluation was a key factor, with the Dow rising 67% from January 1985 to mid-1987, compared to a 57% increase over the last three years [2] Current Market Metrics - The S&P 500 is considered a more relevant metric than the Dow for assessing market performance today, with the "Magnificent 7" stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla) comprising 34% of the index's total value [3] Valuation Concerns - There are signs of weakening valuations among the Magnificent 7 stocks, particularly Apple, which has only increased by 2% this year due to a lack of high-end AI products, and Tesla, which is up 9% amid debates about its core business focus [4] - The future value of major tech stocks is heavily tied to their investments in AI, with companies like Nvidia, Microsoft, Meta, Amazon, and Alphabet planning to spend tens of billions on AI data centers [5] Earnings and Market Impact - Upcoming earnings reports and forecasts for the third quarter will provide early insights into the future of AI; any uncertainty in these results could lead to a significant market downturn [6]