September Selloff Puts AI Rally on Notice

The September 3, 2024 market selloff was not triggered by an AI panic, but rather by weak factory data that gave investors reason to doubt the rally's sustainability.

The Dow Jones Industrial Average fell 626.15 points on September 3, closing at 40,936.93, while the S&P 500 dropped 2.12% to 5,528.93 and the Nasdaq Composite sank 3.26% to 17,136.30.

The trigger for the selloff was the release of factory data by S&P Global, which showed a U.S. Manufacturing PMI fall to 47.9 in August from 49.6 in July, the lowest reading since December 2023.

Chip stocks, particularly Nvidia, took the biggest hit, with the company's stock price falling 9.5% and wiping out $279 billion in market value.