Worries around overheating stocks took over the narrative on Tuesday, underscoring the sense of froth in risky parts of the market that had surged after President-elect Donald Trump’s decisive election victory.
A number of trades that took flight since last week faltered before key US inflation data to be released Wednesday. Small-cap stocks — which tend to be more sensitive to economic conditions than their larger peers — fell from near an all-time high. Equities with a large concentration of bearish bets also sank, as did unprofitable technology shares. Bitcoin briefly dropped from a record before resuming gains, and the stock of Elon Musk-led Tesla Inc. slumped from the highest in more than two years.
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