On Wednesday, US stocks reversed their earlier gains and began trading at a lower level. This movement extended the previous session's pullback, primarily due to sustained pressure on the technology sector as market participants evaluated the potential returns from significant investments in artificial intelligence (AI). The S&P 500 and the Dow Jones Industrial Average both experienced declines of approximately 0.3%, while the Nasdaq 100 fell by 0.4%.
Specifically, companies operating within the AI sector, encompassing both hardware and software producers, saw notable declines as investors critically assessed the sustainability of the current year's AI-inspired surge. Nvidia experienced a 1.5% drop, Oracle declined by 4%, and Palantir fell by 2.5%. This occurred despite Alibaba's announcement of plans to boost its AI spending beyond the $50 billion mark initially promised, which resulted in a 9% rise in its depository receipts. Additionally, Micron saw a 4% decrease, even after reporting earnings that surpassed expectations.
Investors also continued to analyze comments from Federal Reserve Chair Jerome Powell, who highlighted ongoing risks within the labor market and persistent inflation. He also issued a cautionary note regarding the high valuations of equities.
