US stocks lose ground, gold resumes its climb as risk appetite sours

By Stephen Culp

NEW YORK (Reuters) -Wall Street stocks closed sharply lower on Tuesday, extending a selloff prompted in part by the run-up to Nvidia earnings, which could test the artificial intelligence boom amid mounting valuation concerns.

All three major U.S. stock indexes ended deep in negative territory, with crude, bitcoin and gold advancing and U.S. Treasury yields dipping as investor risk appetite soured. The S&P 500 and the Dow logged their fourth consecutive daily losses, during which the bellwether S&P 500 has fallen 3.4%.

Chipmaker Nvidia's quarterly results, expected on Wednesday, will be scrutinized for signs that the AI juggernaut, which has provided the muscle for much of the stock market's recent rally, has staying power or whether the fervor surrounding the technology has created a bubble.

In other earnings, home improvement retailer Home Depot forecast a steeper than expected drop in annual profit, raising concerns about the housing market and the health of the American consumer.

"Investors are sensing that the tenor of the market has shifted," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "They don't necessarily want to be too bullish on tech in case Nvidia doesn't hit the ball out of the park."

"We're getting toward the end of a pretty good year, especially if you were a tech investor, and now you're starting to see a bit of a pullback," Carlson added. "(Investors) want to make sure that they protect their gains."  

Official economic indicators that were unavailable during the longest government shutdown in U.S. history are being released, with the Commerce Department's August report of new orders for U.S. factory-made goods gaining 1.4% as expected.

WORLDWIDE SELLOFF DEEPENS

The Dow Jones Industrial Average fell 498.56 points, or 1.07%, to 46,091.68, the S&P 500 fell 55.08 points, or 0.83%, to 6,617.33 and the Nasdaq Composite fell 275.23 points, or 1.21%, to 22,432.85. 

European shares closed at a one-month low, with German stocks hitting a near five-month low as risk appetite continued to sour due to worries over tech valuations and dimming hopes for a December rate cut from the U.S. Federal Reserve.

MSCI's gauge of stocks across the globe  fell 11.64 points, or 1.18%, to 976.17.

The pan-European STOXX 600 index fell 1.72%, while Europe's broad FTSEurofirst 300 index fell 39.04 points, or 1.71%.

Emerging market stocks  fell 24.29 points, or 1.75%, to 1,363.56. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 1.9%, to 701.18, while Japan's Nikkei fell 1,620.93 points, or 3.22%, to 48,702.98.

U.S. Treasury yields fell as falling stock markets bolstered safe-haven demand.

The yield on benchmark U.S. 10-year notes fell 1.4 basis points to 4.119%, from 4.133% late on Monday.

The 30-year bond yield  rose 0.5 basis points to 4.7408% from 4.736% late on Monday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 3.5 basis points to 3.575%, from 3.61% late on Monday.

DOLLAR STEADIES, CRYPTO REBOUNDS, GOLD GAINS

The dollar held gains against the yen after reaching a fresh 9-1/2-month high, and edged up versus the euro as investors contended with jitters over Japan's fiscal policy and scoured data for signals on the Federal Reserve's next move. 

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.05% to 99.60, with the euro down 0.09% at $1.1579.

Against the Japanese yen, the dollar strengthened 0.18% to 155.52.

Bitcoin reversed course, gaining 0.99% to $92,715.39 after dipping below $90,000, nearly 30% below its peak. Ethereum rose 3.69% to $3,116.25.

Crude prices turned higher as investors assessed the impact of sanctions on Russian oil.

U.S. crude gained 1.39% to settle at $60.74 per barrel, while Brent settled at $64.89 per barrel, up 1.07% on the day.

Gold reversed its slide, turning losses to gains after touching a one-week low. 

Spot gold rose 0.64% to $4,070.25 an ounce. U.S. gold futures fell 0.12% to $4,063.40 an ounce.

(Reporting by Stephen Culp; Additional reporting by Scott Murdoch and Lucy Raitano; Editing by Bill Berkrot, Nick Zieminski and Deepa Babington)