NEW YORK: Wall Street’s main indexes fell on Wednesday, with the S&P 500 and the tech-heavy Nasdaq at three-week lows as nagging worries about the artificial intelligence trade weighed on technology stocks.
Oracle fell nearly 5% after a report stated that the cloud company’s largest data centre partner, Blue Owl Capital, will not back a US$10 billion deal for its next facility.
Amazon.com gained 0.3% after reports said the company is in talks to invest about US$10 billion in ChatGPT maker OpenAI.
Worries about the broader technology sector taking on more debt to develop artificial intelligence have discouraged risk-taking lately.
“There’s percolating anxiety about the AI trade. … The primary driver is the level of capex and circular nature of some of the spending, with OpenAI being at the centre of that,” said Ross Mayfield, investment strategist at Baird Private Wealth Management.
“The broader question heading into the New Year is about the sustainability and return on investment of all this spending,” he said.
AI bellwether Nvidia fell 3.4% while chipmaker Broadcom dropped 5.5%, sending a broader chips index down 3.3%.
At 2pm, 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, and the Nasdaq Composite lost 331.85 points, or 1.44%, to 22,779.61.
Six of the 11 major S&P subsectors were trading lower, with technology down the most, falling 1.9%.
Alphabet shares fell 2.6% after a Reuters report said its Google unit is taking on a new initiative to erode Nvidia’s software advantage.
In the latest on who could take control of Warner Bros Discovery, the media company’s board rejected Paramount Skydance’s US$108.4 billion hostile bid, favouring Netflix’s binding offer.
Netflix’s shares rose 0.9%, while Paramount and Warner Bros were down 3.8% and 2.1%, respectively.
Energy stocks rose along with crude prices as US President Donald Trump ordered a “blockade” of all sanctioned oil tankers entering and leaving Venezuela.
ConocoPhillips and Occidental Petroleum gained over 3% each.
Offering some relief for investors was Federal Reserve governor Christopher Waller, often viewed as a dove on monetary policy.
He said that the central bank still had room to cut interest rates against a softening jobs market.
The next significant report will be today’s consumer inflation data by the commerce department.
Declining issues outnumbered advancers by a 1.44-to-1 ratio on the NYSE and by a 1.7-to-1 ratio on the Nasdaq.
The S&P 500 posted 11 new 52-week highs and no new lows, while the Nasdaq Composite recorded 74 new highs and 128 new lows.
