U.S. stocks had their worst day since 2022 on Wednesday amid a broad pullback in tech companies as Wall Street traders sought to reduce their exposure to firms that have made big bets on artificial intelligence.<\/p>\n
The tech-heavy Nasdaq index closed down 3.6%, while the broader S&P 500 index closed down 2.3% \u2014 both their worst performances in more than 18 months. The Dow Jones Industrial Average fell 1.25%. <\/p>\n
The rout was led by Tesla, whose shares fell 12.3% for its worst day since 2020, and Google parent Alphabet, which fell more than 5% for its worst day since January.<\/p>\n
Tesla reported Tuesday afternoon that its auto revenues fell 7% compared with the previous quarter, and CEO Elon Musk said in a follow-up earnings call that the company\u2019s planned robotaxi rollout would be pushed back.<\/p>\n
Although Alphabet reported earnings Tuesday that were in line with analysts\u2019 expectations, traders appeared to seize on remarks CEO Sundar Pichai made on the company\u2019s earnings call that signaled the tech world\u2019s booming investments in artificial intelligence were not going to pay off in a short time frame. <\/p>\n
\u2018I think we are in this phase where we have to deeply work and make sure on these use cases [for AI products], on these workflows, we are driving deeper progress on unlocking value, which I\u2019m very bullish will happen,\u2019 Pichai said. \u2018But these things take time.\u2019<\/p>\n
Steve Sosnick, chief strategist\u00a0at Interactive Brokers financial group, said Wall Street took that as a signal to sell off shares that had enjoyed the frenzied growth that tech stocks have been experiencing in recent months.<\/p>\n
\u2018We\u2019re seeing some nervous profit-taking in some of the stocks that have been leveraged to AI that a lot of investors have come to rely on as a consistent source of stock market gains,\u2019 Sosnick told NBC News. <\/p>\n
Alphabet also reported weaker-than-expected ad revenue from YouTube, which Google has owned since 2006. <\/p>\n
Other major tech names having major losses Wednesday included Nvidia, the computer chip maker powering much of the AI revolution, whose shares fell more than 6% for their worst day since 2022; Facebook parent Meta was down 5%; Microsoft fell 3.5%; and Amazon lost 3%.<\/p>\n
The major indices have been on a relatively consistent and positive run. Even after Wednesday\u2019s dip, the S&P 500 remains up 13.8% in 2024, with the Nasdaq up 15.5% and the Dow up 5.7% in that time.<\/p>\n
Wednesday\u2019s sell-off comes amid renewed expectations for an interest-rate cut from the Federal Reserve in response to a slowing economy. While traders now say the Fed\u2019s first cut of the post-pandemic period is virtually guaranteed by September, former Federal Reserve Bank of New York President Bill Dudley wrote Wednesday that the Fed needs to strongly consider announcing a cut at its meeting next Wednesday.<\/p>\n
\u2018Although it might already be too late to fend off a recession by cutting rates, dawdling now unnecessarily increases the risk,\u2019 Dudley, now an executive at UBS financial group, wrote in a column for Bloomberg News.<\/p>\n
Sosnick said Wednesday\u2019s stock sell-off was not a total referendum on the broader state of the economy. Year to date, the S&P 500 has still had healthy gains of about 15%, while the Nasdaq is up about 18% and the Dow Jones Industrial Average is up 6%. <\/p>\n
\u2018This is much more about a little bit of vertigo in names that have climbed a lot this year,\u2019 Sosnick said. <\/p>\n
But signs of a broader economic pullback continue to mount: The U.S. unemployment rate is rising, excess savings from the pandemic have been exhausted, and consumer borrowing stress is at fresh highs.<\/p>\n
\u2018We expect relatively weak economic growth in the second half of 2024 and early 2025,\u2019 Ian Shepherdson, chief economist at Pantheon Macroeconomics research group, wrote in a note to clients Wednesday. <\/p>\n<\/p>\n
U.S. stocks had their worst day since 2022 on Wednesday amid a broad pullback in tech companies as Wall Street traders sought to reduce their exposure to firms that have made big bets on artificial intelligence. The tech-heavy Nasdaq index closed down 3.6%, while the broader S&P 500 index closed down 2.3% \u2014 both their […]<\/p>\n","protected":false},"author":0,"featured_media":6728,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-6727","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/6727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=6727"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/6727\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/6728"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=6727"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=6727"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=6727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}