Nasdaq plunges into correction territory

Markets were mostly lower on Tuesday.

In the US, the S&P 500 tumbled 2.8 percent and the Nasdaq Composite plunged 4.1 percent, the latter falling into correction territory after declining 10 percent in three sessions.

Elsewhere, the STOXX Europe 600 fell 1.2 percent but earlier in the day, Asian markets were higher, with the Nikkei 225 gaining 0.8 percent.

Analysts cited remarks by US President Donald Trump on Monday threatening to “decouple” the US economy from China as contributing to the decline.

The sharp decline in US tech stocks in particular comes as many analysts are describing the tech rally as a bubble.

Andrew Parlin, founder and chief investment officer of investment advisory Washington Peak, said that “insanely high price-to-sales ratios highlight the total lack of realism embedded in the hottest growth stocks” and that a “shocking, spectacular and disorderly” market crash looms.

However, Blackstone's Byron Wien is more sanguine.

“There is a good part of the market that’s underpriced,” he said. “Airlines, transportation and hospitality have performed poorly, and some represent good value for patient investors who can tolerate the risk as a part of their portfolio.”

Also, while some of the market turmoil has been driven by US-China tension, “if there would be some reconciliation or some rapprochement between the U.S. and China that would restore normal relations, it would be interpreted favorably by the financial markets”.