NEW YORK: The Nasdaq led losses on Thursday, as a recent rally in technology stocks lost steam, with Nvidia’s stellar results failing to enthuse investors and reigniting worries over the AI trade.
The AI bellwether dropped 4.5 percent despite better-than-expected results for the January quarter and an upbeat current-quarter revenue forecast.
“The reaction is a little surprising and it is a continuation of what we see as the main issue: valuations,” said Jake Johnston, portfolio manager at Advisors Asset Management.
“We see the tech premium seems to be coming out of the market and a lot of this has to do with the fact that a lot of these names were priced for perfection, perhaps even a little too frothy.”
The Philadelphia SE Semiconductor Index dropped 3.4 percent after hitting a record high in the previous session, on pace to snap a 10-week winning streak, if losses hold.
Most megacap and growth stocks were lower, with Alphabet and Amazon.com down more than 1 percent each.
Meanwhile, the S&P 500 software and services index gained 0.7 percent, rebounding from a recent rout, as Salesforce climbed 2 percent despite a subdued revenue forecast for its fiscal 2027.
Software, financial brokerages, data analytics and legal services, real estate services and trucking sectors clocked heavy losses earlier this year over AI disruption fears.
The S&P 500 and the Nasdaq closed at two-week highs on Wednesday, fueled by a rally in heavyweight technology stocks.
At 11:48 a.m., the Dow Jones Industrial Average fell 112.27 points, or 0.23 percent, to 49,369.88, the S&P 500 lost 60.76 points, or 0.87 percent, to 6,885.05 and the Nasdaq Composite lost 355.32 points, or 1.53 percent, to 22,796.76.
The information technology index and the communication services index were the biggest decliners among the 11 major S&P sectors.
Financials gained 0.8 percent, helping offset some losses.
Big banks including Morgan Stanley, Goldman Sachs and Citigroup rose nearly 1 percent each.
Investors also monitored the latest round of US-Iran talks in Geneva aimed at resolving their longstanding nuclear dispute and averting new strikes on Iran.
Crude oil prices reversed their initial declines and were last up more than 1 percent, with the energy stocks index climbing 0.9 percent.
February has been choppy, with the main US indexes swinging sharply between gains and losses as sentiment toward AI and technology stocks wavered as investors fretted over the payoff from massive planned AI spending.
Among other stocks, Trade Desk fell 5 percent after the advertising technology firm forecast first-quarter revenue below estimates amid mounting pressure from larger rivals.
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