Wall Street stumbled Tuesday as concerns over high valuations and political uncertainty weighed on markets. The Dow dropped 249 points, or 0.55%, while the S&P 500 lost 0.69% and the Nasdaq slid 0.82%.
The pullback comes after a strong summer rally, with the S&P 500 climbing nearly 30% since April and hitting 20 record highs this year. But some analysts warn the market looks stretched. The index recently traded at 3.25 times sales, its highest level ever, according to FactSet. Warren Buffett’s preferred indicator, which compares total market value to U.S. economic output, is flashing at 217% — suggesting stocks may be significantly overvalued.
“We are trading at extremes,” said Sam Stovall, chief investment strategist at CFRA Research.
The rally has been fueled by tech heavyweights including Apple, Amazon, Microsoft, Nvidia and Tesla. Together, the so-called Magnificent Seven now make up more than a third of the S&P 500’s value. But all of them fell Tuesday, with Nvidia down nearly 2%.
September has historically been a tough month for equities, and volatility spiked as the CBOE fear gauge jumped 15%. At the same time, Treasury yields rose, with the 30-year yield touching 4.98%, pressuring stocks further.
Gold, a traditional safe haven, hit a record high and is up 35% this year as investors brace for uncertainty around President Donald Trump’s tariff policies and his feud with the Federal Reserve.
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