Nvidia drags Wall Street toward its worst day in a month as AI superstars keep weakening

The S&P 500 fell 1.5% and pulled back even more All-time highs Appointed late last month. It’s on pace for its worst day in a month and its second-worst day since its April drop after President Donald Trump shocked the world by announcing “Emancipation Day” tariffs. The Dow Jones Industrial Average lost 565 points, or 1.2%, from Its own record It was set the previous day, while the Nasdaq Composite Index was down 2.4%, as of 1:29 PM ET.

Nvidia was the heaviest player in the market after the chip company lost 4.7%. Other AI companies also suffered, including declines of 7.6% for Super Micro Computer, 6.6% for Palantir Technologies, and 4.7% for Broadcom.

Questions have been growing about how much these AI super stocks can add to already impressive gains. At the beginning of this month, Palantir was up a staggering nearly 174% for the year so far, for example.

Such an impressive performance was one of the main reasons the US market hit record numbers though Labor market slowdown and High inflation. Artificial Intelligence Stocks Prices have risen dramaticallyAlthough they also draw Comparisons to the dot-com bubble of 2000 Which eventually exploded, pulling the S&P 500 nearly in half.

Meanwhile, stocks fell on Wall Street as traders worried that the Federal Reserve might not make another rate cut in December, as had been assumed.

Wall Street likes interest rate cuts because they can stimulate the economy and investment prices, although they can also worsen inflation. Pausing the cuts could undermine U.S. stock prices, which have already reached record levels in part due to expectations of a series of additional cuts.

Expectations have fallen sharply in recent days that the Federal Reserve will cut its key interest rate at its next meeting in December. Traders now see less chance of a coin flip, at 47.6%, down from nearly 70% a week ago, according to data from CME Group.

Recent comments from Federal Reserve officials have helped raise doubts.

Boston Fed President Susan Collins said late Wednesday that it would likely be appropriate to leave interest rates steady “for some time.” That was a turnaround for her Speech last monthWhen I backed another cut.

The Fed’s job has become more difficult recently because of the US government’s job Six-week closureWhich delayed many Important labor market updates and other signals On the strength of the economy.

The stock market mostly rose during the lockdown period, As has often happened historicallyBut Wall Street is bracing for potential volatility as the government returns to issuing those updates. The fear is that the data can be convincing Federal Reserve To stop interest rate cuts, which can boost the economy but also worsen inflation. Wall Street has

“The looming deluge of data could lead to additional volatility in the coming weeks,” said Doug Beth, global equity strategist at Wells Fargo Investment Institute.

On Wall Street, Walt Disney Co. helped lead the market lower after falling 7.8%. Entertainment giant Announced fourth quarter earnings Which exceeded analysts’ expectations, but its revenues were less than that.

That helped offset a 4.9% jump for Cisco Systems after the tech giant posted larger profits and revenue than analysts had expected.

In the bond market, Treasury yields rose, putting downward pressure on the prices of stocks and other investments.

The yield on the 10-year Treasury note rose to 4.10% from 4.08% late Wednesday.

In overseas stock markets, indices fell in Europe after modest gains in Asia.

The Nikkei 225 index in Tokyo rose 0.4%, even as Japanese technology giant SoftBank Group lost another 3.4%. She has been struggling since she said earlier this week that she was has sold out All of its $5.8 billion stake in Nvidia.

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AP writers Teresa Cirugano and Matt Ott contributed.