S&P 500, Nasdaq end sharply lower as revived AI doubts ignite tech selloff
- Investor confidence wavered on Monday as Wall Street faced significant volatility, driven by a sharp selloff in AI-related shares and a rotation into defensive assets.
- Following Meta Platforms' disclosure of plans to allocate $825 billion to AI-related capital expenditures, Tesla cut its spending plan to $20 billion, renewing concerns about infrastructure spending sustainability.
- Even Nvidia CEO Jensen Huang acknowledged that "demand of the capital is much greater than the availability of the capital," as CoreWeave shares fell 10% Thursday amid rising borrowing costs.
- Seeking safety, investors rotated into consumer staples like Kimberly-Clark, which jumped 4.3%, while Home Depot increased 3.3% as the 10-year Treasury yield fluctuated before ending the week lower.
- Traders assigned a 93.5% probability that the Federal Reserve will leave interest rates unchanged on Wednesday, as investors weigh persistent inflation against broader economic growth.
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For the second week in a row, the US stock market continued its downward trend due to still fragile investment sentiment in the field of artificial intelligence (AI) and rising crude oil prices. True, the weekly minus was considerably milder compared to the previous week - the S&P 500 index weakened by half a percent, while the index of technology shares, the Nasdaq, fell 0.7 percent.
Stock markets continue to be paralysed by fears over rising debt levels among AI companies. The sell-off in the sector was particularly evident on Thursday, when the NASDAQ 100 index fell by its biggest drop in more than three years. Rising oil prices are also causing concern.
Wall Street Review: Small Caps Outperform as Bond Yields Ease
Small-cap stocks outperformed this week as investors rotated out of the volatile AI trade and into interest-rate-sensitive sectors, helped by a retreat in Treasury yields. The Russell 2000 gained 2 percent for the week, leading the major U.S. equity indexes. The Dow Jones Industrial Average slipped 0.41 percent to close Friday at 52,215. The S&P 500 fell 0.47 percent to 7,623, its weekly low, while the Nasdaq Composite lost 0.71 percent, ending…
AI spending concerns weigh on technology shares as oil jumps
Wall Street's latest technology selloff exposed a distinction that matters for the artificial-intelligence boom: confidence in a product's future does not guarantee confidence in the price of building it. Investors marked down technology shares on Thursday while oil rose and US government debt attracted demand. The combination puts financing discipline at the centre of the debate. An ambitious investment programme can offer substantial opportuni…
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