Wall Street drops as AI funding worries hit tech stocks

Wall Street's major indexes dropped on Wednesday. The?S&P 500, and the tech-heavy Nasdaq were at their lowest levels in three weeks as nagging concerns about?the??artificial intelligence? trade weighed down on technology stocks.

Oracle shares fell by nearly 5% following a report that said Blue Owl Capital, the company's biggest data center partner, would not support a $10 billion contract for its next facility.

Amazon.com increased by 0.3%.

Reports

OpenAI, the ChatGPT maker, is in negotiations to receive an investment of $10 billion.

Recent risk-taking has been discouraged by concerns about the technology sector's ability to borrow more money in order to develop artificial intelligence.

There's a growing anxiety over the AI industry. ... OpenAI is at the core of this, said Ross Mayfield. Investment strategist?at Baird Private Wealth Management.

He said, "The bigger question going into the New year is about sustainability and return on investments of all these spending."

AI? bellwether Nvidia dropped 3.4%, while Broadcom fell 5.5%. This sent a broader chip index down by 3.3%.

At 2:00 pm ET, the Dow Jones Industrial Average fell?183.16 points or 0.38% to 47,931.10. The S&P 500 lost 66.14 points or 0.97% to 6,734.40. At 2:00 p.m. ET, the Dow Jones Industrial Average dropped 183.16 points or 0.38% to 47,931.10. The S&P 500 fell 66.14 or 0.97% to 6,734.40. And the Nasdaq Composite fell 331.85 or 1.44% to 22,779.61.

Six out of 11 S&P subsectors traded lower. Technology was the worst performing, down 1.9%.

Alphabet's shares dropped 2.6% following a report that said Google is launching a new project to undermine Nvidia’s software advantage.

Netflix's offer was accepted by the board of Warner Bros Discovery in the latest decision on who would take over Warner Bros Discovery. Netflix shares increased by 0.9% while Paramount's and Warner Bros's fell 3.8% and 2.1% respectively. Oil prices and energy stocks both rose as U.S. president Donald Trump ordered "a blockade" on all sanctioned oil tanks entering or leaving Venezuela. ConocoPhillips gained more than 3%. Christopher Waller of the Federal Reserve, who is often seen as a dove in monetary policy, offered some relief to investors. He stated that despite a slowing job market, the central bank had some room to reduce interest rates.

Next up, the Commerce Department will release its consumer inflation report on Thursday.

On the NYSE, declining issues outnumbered advancing ones by a ratio of 1.44 to 1 and by a ratio of 1.7-to-1 on the Nasdaq.

The S&P 500 recorded 11 new 52-week lows, while the Nasdaq Composite registered 74 and 128. Reporting by Abigail Summerville, Johann M Cherian, and Shashwat Chanhan in Bengaluru. Editing by David Gregorio.

(source: Reuters)