Stocks Slip as AI-Driven Tech Selloff Drags Markets Lower
Major U.S. indexes retreat as investors reassess lofty valuations in the tech and AI sectors.
Overview of the market
U.S. markets retreated Tuesday, hurt by worries that technology and artificial-intelligence stocks have risen too far, too quickly. The Dow Jones Industrial Average lost about 1.1%. The S&P 500 fell around 0.8%, while the tech-heavy Nasdaq Composite sank about 1.2% as traders shed some of this year’s biggest gainers.
The weakness wasn’t confined to equities. Corporate bonds from some of the biggest technology companies also extended losses, in a sign that worries about inflated valuations could seep into debt markets. Investors are showing increasing signs of wariness as they reevaluate the momentum behind what has been an extended rally in the sector.
Adding to the pressure is an unpredictable outlook for Federal Reserve policy. Inflation indicators remain mixed, and analysts now question whether the Fed will deliver on expected rate cuts. The high-growth and rate-sensitive technology stocks could be further pressured by any delay or reduction in expected easing.
Small-cap shares bucked the overall downtrend slightly. The Russell 2000 was up about 0.3%, providing a small bright spot in an otherwise weak session. The comparison suggests that though major indices are volatile, some market pockets may still find buying support.
