Dow plunges 500 points on fears of AI bubble, waning hope for Fed rate cut

Market Overview - The Dow Jones Industrial Average fell by more than 300 points, or 0.7%, amid concerns over an AI bubble and uncertainty regarding Federal Reserve rate cuts [1] - The S&P 500 and Nasdaq also experienced declines of 0.3% and 0.6%, respectively, marking a continuation of a tech sector downturn into its third week [1] Company Performance - Nvidia's shares decreased by 1.5% ahead of its third-quarter earnings report, reflecting broader market fears about overvaluation in AI stocks [2] - Major tech companies such as Amazon, Microsoft, and Meta saw significant drops in their stock prices, with declines of 3.8%, 3%, and 1.1%, respectively [3] - Home Depot's shares plummeted by 3.8% after the company lowered its full-year profit forecast and missed earnings estimates due to inflation affecting consumer spending [15] AI Sector Insights - Concerns about an AI bubble are growing, with comparisons being made to the dot-com bubble of the late 1990s and early 2000s [2][3] - Alphabet's CEO Sundar Pichai acknowledged "irrationality" in the current AI boom, suggesting that no company, including Alphabet, would be immune if the bubble were to burst [11][14] Federal Reserve and Economic Indicators - The likelihood of a quarter-point rate cut at the Federal Reserve's December meeting has dropped to just over 50%, down from more than 90% the previous month [8] - Investors are awaiting key economic data releases, including the delayed September jobs report, which could influence the Fed's decision-making [9] Strategic Partnerships - Anthropic announced plans to purchase $30 billion of Azure compute capacity from Microsoft, with Microsoft investing $5 billion and Nvidia contributing $10 billion to the startup [10]