NEW YORK (AP) — Wall Street is fading on Tuesday following drops for Nvidia and other stars that had been riding the mania surrounding artificial-intelligence technology.
The S&P 500 fell 0.7% and is on track for a third straight loss, though it remains near its all-time high set last week. The Dow Jones Industrial Average was down 60 points, or 0.1%, with an hour remaining in trading, and the Nasdaq composite was down 1.5%.
The heaviest weight on the market was Nvidia, whose chips are powering much of the move into AI. It sank 3.1%.
Another AI darling, Palantir Technologies, dropped 9.3% for the largest loss in the S&P 500. It's seen bets build up sharply this year that its stock price will drop, according to S3 Partners. Only Meta Platforms has seen a bigger increase in what's called “short interest,” where traders essentially bet a stock's price will fall. Meta, the owner of Facebook and Instagram, sank 2%.
Criticism has been rising that stock prices across Wall Street have shot too high, too fast since hitting a bottom in April and have become too expensive. Palantir's stock came into Tuesday with a tremendous gain of 442% for the year so far.
One way companies can make their stock prices look less expensive is to deliver growth in profits. Palo Alto Networks climbed 4% after reporting earnings and revenue for the latest quarter that topped analysts’ expectations. The cybersecurity company also gave forecasts for profit and revenue in its upcoming fiscal year that were above Wall Street’s.
Home Depot's rise of 2.9%, meanwhile, was the biggest reason the Dow did better than other indexes. The retailer reported results for the latest quarter that were a bit short of what analysts expected, but it delivered growth in revenue and stood by its prior forecasts for revenue and profit over the full year.
Other big retailers will give their latest profit updates in coming days. Lowe’s and Target are on deck for Wednesday, while Walmart and Ross Stores will report on Thursday.
The week’s headliner for Wall Street is likely arriving on Friday. That’s when the chair of the Federal Reserve, 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 may give a hint that cuts to interest rates are coming soon.
The Fed has been keeping 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.
Traders on Wall Street widely expect the Fed to cut interest rates at its next meeting in September in order to give the economy a boost. Treasury yields have come down notably in the bond market as a result, and they eased on Tuesday.
The yield on the 10-year Treasury fell to 4.30% from 4.34% late Monday.
Strategists at Bank of America warn that Powell may not sound as inclined to cut interest rates as the market is expecting. He could remain non-committal and discuss the possibility of a worst-case scenario for the economy called “stagflation.” The Fed has no good tool to fix that situation, where the economy stagnates at the same time as inflation remains high.
On Wall Street, Viking Therapeutics tumbled 42.1% after the biopharmaceutical company released results from a clinical trial of an oral tablet that could treat obesity and other metabolic disorders.
Nexstar Media Group, which owns the CW and local television broadcasters across the country, fell 1.7% after agreeing to buy Tegna, the owner of 64 television stations, for $22 per share in cash. The companies said combining will give them a broader reach and allow them to better compete with Big Tech and legacy media. Tegna rose 4.1%.
In stock markets abroad, indexes rose in Europe after falling modestly in Asia.
Tokyo’s Nikkei 225 index slipped 0.4% as market heavyweight SoftBank Group Corp. fell 4% after it announced it was taking a $2 billion stake in U.S. chip maker Intel.
Intel climbed 6.8%. U.S. Commerce Secretary Howard Lutnick also confirmed in an interview on CNBC that the Trump administration may take an ownership stake in Intel.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
