U.S. stocks fell sharply on Tuesday, ending a recent rally as bank executives and investors voiced renewed concerns about stretched equity valuations following months of gains driven by artificial intelligence shares, as reported by Reuters.

The Nasdaq Composite led losses with a 2.04 percent drop, followed by a 1.17 percent decline in the S&P 500 and a 0.53 percent fall in the Dow Jones Industrial Average. Both the S&P 500 and the Nasdaq registered their largest one-day declines since early October.

The pullback followed comments from the chiefs of Morgan Stanley and Goldman Sachs, who warned that a correction could be approaching after the S&P 500’s series of record highs. Analysts said the remarks highlighted anxiety that markets have run ahead of earnings strength.

Technology shares bore the brunt of the sell-off, with six of the “Magnificent Seven” AI-driven stocks retreating. The Philadelphia Semiconductor Index lost 4 percent, weighed by weakness in chipmakers. Palantir dropped 8 percent despite upbeat revenue forecasts, while Uber fell 5.1 percent after reporting a quarterly profit miss. Spotify and Shopify also ended the session lower.

The downturn unfolded against a tense political backdrop in Washington, where the government shutdown has extended toward record length. The lack of federal economic data has pushed investors to rely on private reports such as ADP’s employment figures due Wednesday, while Federal Reserve comments are being closely parsed for policy direction.

Among the S&P 500’s 11 sectors, technology posted the steepest fall at 2.3 percent, while financials were the only gainers. On the New York Stock Exchange, decliners outnumbered advancers by roughly two to one, with overall trading volume slightly below the recent 20-day average.