US stocks fell sharply after several major banks warned that the equity market was at risk of a crash, reflecting growing concerns about persistently high valuations.
All three major US indexes fell after Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David M. Solomon warned of a potential market bubble, as the S&P 500 index continued to hit new highs driven by a surge in investor interest in the artificial intelligence (AI) sector.
The S&P 500 and Nasdaq indexes recorded their biggest daily falls since October 10.
The Dow Jones Industrial Average fell 0.53% to 47,085.24 points, the S&P 500 fell 1.17% to 6,771.55 points, while the technology-focused Nasdaq plunged 2.04% to 23,348.64 points.
The technology sector was the main contributor to the Nasdaq Composite's decline as six of the seven leading AI-related stocks in the "Magnificent Seven" fell in the session.
The Philadelphia SE Semiconductor Index fell 4.0%.
JPMorgan Chase CEO Jamie Dimon warned last month that the stock market could face a significant downside risk in the next six months to two years due to geopolitical tensions.
In other developments, the partial US government shutdown due to a deadlock in Congress is now approaching its longest on record.
Meanwhile, the lack of official government data has also prompted greater focus on private sources such as the ADP National Employment Report due on Wednesday.
Statements from Federal Reserve officials are also being closely watched for clues on how the data-dependent central bank will adjust its monetary policy in the absence of key economic indicators.
Meanwhile, Uber Technologies shares fell 5.1% after reporting a quarterly loss, while Henry Schein shares rose 10.8% after raising its annual profit forecast.
Trading volume on US exchanges was worth $19.82 billion, compared to an average of $21.04 billion for the 20-day trading period.
