Both the S&P 500 and Nasdaq recorded their biggest one-day percentage drop since October 10. Photo: AP PHOTO

US stocks have closed sharply lower as big banks warn equity markets could be headed for a drawdown, reflecting mounting concerns over stretched valuations.

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All three major US stock indexes slid well into negative territory after the chief executives of Morgan Stanley and Goldman Sachs stoked fears of a potential market bubble, with the S&P 500 having climbed to a series of all-time highs, largely powered by the artificial intelligence boom.

The S&P 500 and the Nasdaq suffer

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