Wall Street closes lower after AI funding worries drag down tech stocks
Wall Street's major indexes fell on Wednesday, as the S&P 500 and tech-heavy Nasdaq sank to three-week lows. Worries about artificial intelligence trade continued to weigh on technology stocks.
Oracle shares fell after a report stated that Blue Owl Capital, the largest data center partner of Oracle's cloud company, would not support a $10 billion contract for its next facility.
Amazon.com's stock price fell after reports that the company was in talks with OpenAI to invest $10 billion.
Recent risk-taking has been discouraged by concerns about the technology sector taking on additional debt to develop artificial Intelligence.
There's a growing anxiety about the AI industry. ... OpenAI is at the heart of this, said Ross Mayfield. Investment strategist at Baird Private Wealth Management.
He said, "The bigger question going into the New Year is sustainability and return on investments of all these spending."
Nvidia, the AI leader and Broadcom, a chipmaker both dropped in value. This sent a broader index of chips down.
The preliminary data shows that the S&P 500 fell 78.52, or 1.15% to 6,722.22 points. Meanwhile, the Nasdaq Composite dropped 415.97, or 1.80% to 22,695.50 points. The Dow Jones Industrial Average dropped 225.85, or 0.47% to 47,888.41.
Alphabet's shares dropped after a report that its Google unit was taking on a "new initiative" to undermine Nvidia’s software advantage and was working with Meta in order to do so.
Google-owned YouTube has announced that it will exclusively stream the Oscars on its platform,?for free worldwide and on YouTube TV beginning in 2029.
Other media news: The board of Warner Bros Discovery rejected Paramount Skydance’s hostile bid of $108.4 billion for the media company and favored Netflix's binding proposal.
Netflix shares are up, but Paramount and Warner Bros. are down.
Oil prices and energy stocks both rose as U.S. president Donald Trump imposed a "blockade", preventing all sanctioned oil tankers from entering or leaving Venezuela. ConocoPhillips gained, as did Occidental Petroleum.
Christopher Waller of the Federal Reserve, who is often viewed as a dove in monetary policy, offered some relief to investors. He said that the central bank had some room to reduce interest rates in light of a softer jobs market.
The Commerce Department will release its consumer inflation report on Thursday. Abigail Summerville, Johann M Cherian, Shashwat Chanhan and David Gregorio in New York are reporting; and Shashwat and Johann in Bengaluru and editing by David Gregorio.
(source: Reuters)
