Wall Street closes lower after AI funding worries drag down tech stocks
Wall Street's major indexes ended lower on Wednesday. The S&P 500, and the tech-heavy Nasdaq fell to new lows in three weeks as persistent concerns about the artificial-intelligence trade weighed down technology stocks. Oracle fell 5.4% following a report that said Blue Owl Capital, the largest cloud data center partner of Oracle, would not support a $10 billion contract for its next facility. Amazon.com dropped 0.6% following reports that the company was in talks with ChatGPT maker 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 percolating fear about the AI trade. ... OpenAI is at the heart of this, according to Ross Mayfield. Investment strategist at Baird Private Wealth Management.
He said that the question for the coming year was "the sustainability and return of investment" on all these expenditures.
Nvidia, the AI leader in chips, fell by 3.8%. Broadcom also dropped by 4.5%. This sent a broader index of chips down by 3.9%.
The Dow Jones Industrial Average dropped 228.29 or 0.47% to 47,885.97. S&P500 lost 78.83 or 1.16% points to 6,721.43. The Nasdaq Composite fell 418.14 or 1.81% to 22,693.32. Alphabet's shares dropped 3.2% following a report that said Google, the Alphabet unit, is working with Meta on a new project to undermine Nvidia’s software advantage.
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. Warner Bros Discovery board of directors rejected Paramount Skydance’s hostile bid of $108.4 billion for the media company and favored Netflix's binding proposal. Netflix's shares rose by 0.2% while Paramount, Warner Bros, and Warner fell by 5.4% and 2.4% respectively. Oil prices rose in tandem with energy stocks as U.S. president Donald Trump ordered an "oil tanker blockade" on all sanctioned vessels entering or leaving Venezuela. ConocoPhillips gained 4% and Occidental Petroleum 5%. Christopher Waller of the Federal Reserve, who is often seen 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 softening job market.
The Commerce Department will release its consumer inflation report on Thursday.
On the NYSE, declining issues outnumbered advancing ones by a ratio of 1.5 to 1. On the NYSE, there were 135 new peaks and 104 new troughs. On the Nasdaq 1,496 shares rose, while 3,162 declined. Declining issues outnumbered advancers by 2.11 to 1.
The S&P 500 recorded 12 new 52-week lows, while the Nasdaq Composite posted 85 new highs.
The volume on U.S. stock exchanges reached 17.92 billion shares compared to the 16.97 billion that was averaged over the past 20 trading sessions. Reporting by Abigail Summerville, in New York; Johann M Cherian, in Bengaluru and Shashwat Chanhan in Bengaluru. Editing by David Gregorio.
(source: Reuters)
