NEW YORK — Nvidia, Palantir and other superstar stocks that surged in the mania surrounding artificial-intelligence technology are dragging Wall Street lower again on Wednesday.
The S&P 500 fell 0.9 per cent and was on track for a fourth straight loss after setting an all-time high last week. The Dow Jones Industrial Average was down 132 points, or 0.3 per cent, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 1.6 per cent lower.
Nvidia, whose chips are powering much of the world’s move into AI, dropped 3 per cent and was on track to be the heaviest weight on Wall Street for a second straight day following its 3.5 per cent fall on Tuesday.
Palantir Technologies, another AI darling, sank 8.1 per cent to add to its 9.4 per cent loss from the day before.
One possible contributor to the swoon was a study from MIT’s Nanda Initiative that warned most corporations are not yet seeing any measurable return from their generative AI investments, according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
But such stocks have also been facing criticism for a while that their stock prices simply shot too high, too fast amid the furor around AI and became too expensive. Nvidia, whose profit report scheduled for next week is one of Wall Street’s next major events, had soared 35.5 per cent for the year so far before Tuesday. Palantir had surged even more, more than doubling.
The tech stocks still have supporters, though, who say AI will bring the next generational revolution in business.
Mixed profit reports from big U.S. retailers helped keep the rest of the market in check, and nearly as many stocks rose in the S&P 500 index as fell.
TJX, the company behind the TJ Maxx and Marshalls stores, climbed 4.6 per cent after beating analysts’ forecasts for profit and revenue. It also raised its forecast for profit over its full fiscal year, while CEO Ernie Herrman said TJX is seeing “strong demand at each of our U.S. and international businesses” and that its current quarter is off to a strong start.
Lowe’s added 0.2 per cent after the home-improvement retailer delivered a profit for the latest quarter that topped analysts’ expectations. It also said it agreed to buy Foundation Building Materials, a distributor of drywall, ceiling systems and other interior building products, for about US$8.8 billion.
Target, meanwhile, tumbled 8.1 per cent even though it edged past analysts’ expectations for profit in the spring. The struggling retailer said that CEO Brian Cornell plans to step down Feb. 1 and that an insider, 20-year veteran Michael Fiddelke, will replace him. He helped reenergize the company, but it has struggled to turn around weak sales in a more competitive post-COVID retail landscape.
Estee Lauder dropped 4.9 per cent after offering a forecast for profit this upcoming fiscal year that fell short of Wall Street’s estimates. The beauty company said it expects tariffs to shave roughly US$100 million off its upcoming earnings.
La-Z-Boy sank 11.5 per cent after the furniture maker’s profit and revenue for the spring came up shy of analysts’ expectations. CEO Melinda Whittington said it’s contending with “soft industry demand” and that it’s looking at potential alternatives “to address financial pressure from non-core’ parts” of its business.
The week’s biggest news for Wall Street is likely arriving on Friday, when Federal Reserve Chair Jerome Powell will give a highly anticipated speech in Jackson Hole, Wyoming. The setting has been home to big policy announcements from the Fed in the past, and the hope on Wall Street is that Powell will hint that an interest rate cut is coming soon.
The Fed has kept its main interest rate steady this year, primarily because of the fear of the possibility that President Donald Trump’s tariffs could push inflation higher. But a surprisingly weak report on job growth across the country may be superseding that.
Treasury yields have come down sharply on expectations for coming cuts to interest rates, and the yield on the 10-year Treasury edged down to 4.29 per cent from 4.30 per cent late Tuesday.
In stock markets abroad, indexes were mixed across Europe and Asia.
London’s FTSE 100 rose 1.1 per cent despite a report that said inflation in the U.K. rose more than expected through July, in part due to soaring airfares and food prices.
Tokyo’s Nikkei 225 dropped 1.5 per cent after Japan reported that its exports fell slightly more than expected in July, pressured by higher tariffs on goods shipped to the U.S. Imports also fell from a year ago.
Hong Kong’s Hang Seng added 0.2 per cent. Shares that trade there of Chinese toy company Pop Mart International Group soared 12.5 per cent after its CEO said its annual revenue could top US$4 billion this year and announced the release of a mini version of its popular Labubu dolls.
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Stan Choe, The Associated Press
AP Business Writers Yuri Kageyama and Matt Ott contributed.
