Nvidia was the heaviest weight on the market after the chip company lost 3.6 per cent. Super Micro Computer dropped 7.4 per cent, Palantir Technologies dropped 6.6 per cent and Broadcom 5.5 per cent.
Questions have been raised about how much more superstar AI stocks can add to their already spectacular gains. At the start of this month, Palantir was sporting a stunning rise of nearly 174 per cent for the year, for example.
Wall Street had its second-worst day since April on Thursday. Credit: Bloomberg
Such sensational performances have been one of the top reasons the US market has hit records despite a slowing job market and high inflation. AI stock prices have shot so high, though, that they’re also drawing comparisons to the 2000 dotcom bubble which ultimately burst and dragged the S&P 500 down by nearly half.
A number of other high-profile tech stocks also lost ground, with Tesla shedding 6.6 per cent and Amazon falling 2.7 per cent.
Wall Street is waiting to see if more news coming about the economy’s health will be good news or bad.
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The US government is reopening following a six-week shutdown, its longest in history. The stock market mostly rose through the shutdown, as it has often done historically, but Wall Street is bracing for potential swings as the government gets back to releasing important updates on the job market and other signals about the economy’s strength.
The fear is that the data could persuade the Federal Reserve to halt its cuts to interest rates, which can boost the economy but also worsen inflation. Wall Street has already run to records in part on expectations for more such cuts, and a halt in them could hurt the stock market.
The “looming data deluge may spur additional volatility in the coming weeks,” according to Doug Beath, global equity strategist at Wells Fargo Investment Institute.
Traders have already reduced their bets that the Fed will cut its main interest rate at its next meeting in December, now seeing a 50 per cent chance of that, down from nearly 70 per cent a week ago, according to data from CME Group.
That helped push yields higher in the bond market, which can weigh on prices for stocks and other investments.
The yield on the 10-year Treasury bond rose to 4.10 per cent from 4.08 per cent late on Wednesday.
In stock markets abroad, indexes sagged in Europe.
With AP
