US stocks today: Nasdaq slumps 2.5%, S&P 1% as revived AI doubts ignite tech selloff
ETMarkets.comUS stocks fall as AI fears hit tech shares.
The Nasdaq Composite fell 2.58% to 26,008.86, while the S&P 500 dropped 1.19% to 7,664.77. The Dow Jones Industrial Average bucked the trend, edging up 0.03% to 52,873.60.
The selloff was concentrated in technology and semiconductor stocks, with the Philadelphia SE Semiconductor Index plunging. The index has now lost about one fourth of its value from its June 22 record close, although it remains sharply higher for the year, according to Reuters.
The latest pressure came from a batch of high profile earnings reports that revived questions over whether companies are spending too aggressively on artificial intelligence.
Meta Platforms shares tumbled despite better than expected results after the company reported its first cash outflow in more than a decade, driven by AI related spending. Tesla also fell even after reporting positive free cash flow and cutting its 2026 capital spending plans.
"It’s a wonderful day on Wall Street," said Paul Nolte, senior wealth adviser & market strategist at Murphy & Sylvest, according to Reuters. "The only part of the market that is really suffering here is technology, which has been the golden child of the markets up until about June."
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Semiconductor stocks bore much of the damage, with Western Digital, Intel, ADM, Sandisk and Marvell among the steep decliners."Investors are starting to realize that there are some holes in the AI story," Nolte said, according to Reuters. "And that's having an impact on the indices because they're so heavily weighted toward technology."
Outside technology, several companies rallied after earnings. Spotify jumped after forecasting fourth quarter profit above Wall Street estimates, while Lockheed Martin gained after raising its annual sales and profit forecast. Blackstone advanced as it pointed to wider spreads on AI related debt as an opportunity for higher returns.
Oil prices also touched a five month high after new strikes against Saudi targets by Iran backed Houthis, raising concerns that prolonged Middle East tensions could keep inflation elevated and complicate the Federal Reserve's rate path, Reuters reported.