Wall Street closes lower as AI funding jitters drag tech stocks
Wall Street's main indexes closed lower on Wednesday, with the S&P 500 and the tech-heavy Nasdaq sinking to three-week lows as nagging worries about the artificial intelligence trade weighed on technology stocks.
Oracle (ORCL.N), opens new tab dropped after a report said the cloud company's largest data center partner Blue Owl Capital (OWL.N), opens new tab will not back a $10 billion deal for its next facility.
Amazon.com (AMZN.O), opens new tab fell slightly after said the company is in talks to invest about $10 billion in ChatGPT maker OpenAI.
Worries about the broader technology sector taking on more debt to develop artificial intelligence have discouraged risk-taking lately.
"There’s percolating anxiety about the AI trade. ... The primary driver is the level of capex and circular nature of some of the spending with OpenAI being at the center of that," said Ross Mayfield, investment strategist at Baird Private Wealth Management.
"The broader question heading into the New Year is about the sustainability and return on investment of all this spending," he said.
AI bellwether Nvidia (NVDA.O), opens new tab and chipmaker Broadcom (AVGO.O), opens new tab both fell, sending a broader chips index (.SOX), opens new tab down.
According to preliminary data, the S&P 500 (.SPX), opens new tab lost 78.52 points, or 1.15%, to end at 6,722.22 points, while the Nasdaq Composite (.IXIC), opens new tab lost 415.97 points, or 1.80%, to 22,695.50. The Dow Jones Industrial Average (.DJI), opens new tab fell 225.85 points, or 0.47%, to 47,888.41.
Source: Reuters.com
