Artificial-intelligence stocks are resuming their sell-off on Tuesday, and the former superstars that had led the market to records are dragging Wall Street down with them.
The S&P 500 dropped 1.5% after erasing an early gain of 1% and pulled further from its all-time high set a week ago. The Dow Jones Industrial Average was down 294 points, or 0.6%, as of 12:15 p.m. Eastern time, and the Nasdaq composite was 2.5% lower.
Indexes swung lower as companies selling computer chips, memory and other building blocks of the AI boom broke from early gains to losses. Micron Technology went from a jump of 4.2% to a drop of 7.5%, for example. That’s a day after it soared 9.9% and two days after it plunged 13.3%.
The computer memory company’s stock has already tripled so far this year, raising criticism that it’s gone too far, too fast. Following last week’s industrywide sell-off, the question is whether AI stocks broadly are heading for a long downturn or just needed a shake-out to get rid of excessive optimism.
Marvell Technology dropped 13.3%, and Advanced Micro Devices sank 8.1% after both AI winners also erased early-morning gains. Nvidia’s fall of 3.4% was the single heaviest weight on the S&P 500 because the chip company is Wall Street’s largest company by value and thus its most influential.
The weakness for AI stocks drowned out the benefit Wall Street got from easing oil prices. More stocks in the S&P 500 actually rose than fell, despite the sharp drop for the overall index, as the price for a barrel of Brent crude oil sank 4.4% to $90.13. It had briefly topped $98 the day before.
Oil prices have swung up and down as hopes fade and rise that the United States and Iran can reach a deal to reopen the Strait of Hormuz. A reopening would allow oil tankers to resume delivering crude from the Persian Gulf to customers worldwide.
The drop in oil prices helped stocks of airlines, which have been punished by soaring fuel costs. U.S. airlines spent more than $6 billion on jet fuel in April, up 78% from a year earlier, according to government data. American Airlines climbed 1.4%, and Delta Air Lines added 1%.
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it's not really the economy though, stock/futures market is a casino working as intended. it's designed explicitely to cause and crash bubbles...there are key rule differences between US and most other world's ~~markets~~ casino's (chief among them, naked shorting, which most the rest of the world just banned outright or very heavily restricted after 2000-08, the US didnt) that when viewed from a high level can be only for 1 reason...
to inflate prices and increase volatility/liquidity, ie. make it "exciting" so more people trade.
essentially, inflate the price of everything and hand out margin like candy...then when things are nice and inflated slam the lines down. anyone overextending themselves because they miscalculated their support?...forcibly liquidated if they don't have the cash on-hand to cover their nargin calls.
see, there's some nerd shit called the black scholes equation which is mathimatical proof for something many of us already understand...whoever has the most $ at play controls the price action entirely (unless/until fundementals reassert themselves, or someone with a lower cost-basis joins the table).
now consider what that means when <1% of the population has over 90% of the wealth...