NEW YORK: Wall Street’s main indexes fell on Wednesday and the Nasdaq hit a two-week low as a rally in technology stocks cooled and caution prevailed ahead of the Federal Reserve’s highly anticipated Jackson Hole symposium later this week
After driving much of the market’s recovery from the April selloff, tech stocks are pulling back as investors reassess high valuations in the sector. The S&P 500 technology index slid 1.4% on the day.
Analysts pointed to a set of possible triggers for the decline: OpenAI CEO Sam Altman said in a report last week artificial intelligence stocks were “in a bubble”, while a study by the Massachusetts Institute of Technology showed most tech companies were struggling to scale. There are also concerns of government interference. Sources said the Trump administration was looking into taking equity stakes in chip firms such as Intel, weeks after unprecedented revenue-sharing deals with Nvidia and AMD.
Nvidia slid 1.7% and Advanced Micro Devices fell 2.2%, while Intel and Micron fell between 6.8% and 5.1%. Nvidia’s quarterly results on August 27 are keenly awaited for clues on demand for artificial intelligence.
Other megacap growth names such as Apple and Meta also came under pressure, falling 1.7% and 1.4%, respectively.
“It’s much more about profit-taking and temporary rebalance here,” said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management in New York. “If you get a Federal Reserve cut or a mention of it on Friday, this will reverse pretty quickly, but this is a lot to do with names pushed up to really lofty levels.”
At 11:58 a.m. ET, the Dow Jones Industrial Average fell 83.91 points, or 0.19%, to 44,838.36, the S&P 500 lost 47.48 points, or 0.74%, to 6,363.89 and the Nasdaq Composite lost 293.78 points, or 1.38%, to 21,021.17.
The Nasdaq was on track for its biggest two-day drop since April, when US tariff announcements had rattled global financial markets.
Minutes from the Fed’s July meeting, where interest rates were left unchanged, are due at 2 p.m. ET and could set the tone for the central bank’s upcoming annual Jackson Hole conference, where Chair Jerome Powell is expected to speak on Friday.
His remarks will be closely watched for policy signals, as investors continue to price in a 25-basis-point rate cut in September, according to data compiled by LSEG.
Remarks from Atlanta Fed President Raphael Bostic are expected later in the day.
Meanwhile, investors also monitored allegations that Fed Governor Lisa Cook was involved in mortgage fraud.
Earnings from big retailers, seen as a barometer for the health of the American consumer, are also in the spotlight this week as sentiment has taken a hit from concerns that tariffs could drive prices higher.
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