U.S. stocks plunged on Tuesday as concerns over inflated valuations prompted warnings from major banks about a possible market correction. The S&P 500, Nasdaq, and Dow all closed in negative territory after Morgan Stanley and Goldman Sachs executives hinted at a looming bubble, largely fueled by recent AI market excitement.

Tech shares took the hardest hit on the Nasdaq, especially among the so-called 'Magnificent Seven' AI-linked companies. Investors are closely watching the market reactions to upcoming earnings reports from Advanced Micro Devices and Super Micro Computer for signs of sustained AI-driven growth.

Amidst the stock market jitters, the U.S. government shutdown looms as it nears a record duration, with traders increasingly relying on private data like ADP's employment index.

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