Wall Street closes lower as AI funding jitters drag tech stocks
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Traders working on the floor of the New York Stock Exchange, in New York City, on Dec 17.
PHOTO: REUTERS
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- Wall Street closed lower; S&P 500 and Nasdaq hit three-week lows due to AI trade worries and tech sector debt concerns.
- Oracle fell after reports indicated a $10 billion data centre deal may be in limbo; Warner Bros rejected Paramount's bid.
- YouTube will exclusively stream the Oscars starting in 2029 with investors awaiting the Commerce Department's inflation data.
AI generated
NEW YORK - Wall Street’s main indexes closed lower on Dec 17, with the S&P 500 and the tech-heavy Nasdaq sinking to three-week lows as nagging worries about the artificial intelligence trade weighed on technology stocks.
Oracle dropped 5.4 per cent after a report said the cloud company’s largest data centre partner Blue Owl Capital will not back a US$10 billion (S$12.9 billion) deal for its next facility.
Amazon.com fell 0.6 per cent after reports said the company is in talks to invest about US$10 billion in ChatGPT maker OpenAI.
Worries about the broader technology sector taking on more debt to develop artificial intelligence have discouraged risk-taking lately.
“There’s percolating anxiety about the AI trade... The primary driver is the level of capex and circular nature of some of the spending with OpenAI being at the center of that,” said Mr Ross Mayfield, investment strategist at Baird Private Wealth Management.
“The broader question heading into the New Year is about the sustainability and return on investment of all this spending,” he said.
AI bellwether Nvidia fell 3.8 per cent and chipmaker Broadcom dropped 4.5 per cent, sending a broader chips index down 3.9 per cent.
The Dow Jones Industrial Average fell 228.29 points, or 0.47 per cent, to 47,885.97.
The S&P 500 lost 78.83 points, or 1.16 per cent, to 6,721.43.
The Nasdaq Composite lost 418.14 points, or 1.81 per cent, to 22,693.32.
Alphabet shares fell 3.2 per cent after a Reuters report said its Google unit is taking on a new initiative to erode Nvidia’s software advantage, and working with Meta to do so.
Google-owned YouTube announced that the Oscar awards will stream exclusively on the platform for free globally and on YouTube TV starting in 2029.
In other media news, Warner Bros Discovery’s board rejected Paramount Skydance’s US$108.4 billion hostile bid for the media company, favouring Netflix’s binding offer. Netflix shares rose 0.2 per cent, while Paramount and Warner Bros fell 5.4 per cent and 2.4 per cent, respectively.
Energy stocks rose along with crude prices as US President Donald Trump ordered a “blockade” of all sanctioned oil tankers entering and leaving Venezuela. ConocoPhillips and Occidental Petroleum both gained over 4 per cent.
Offering some relief for investors was Federal Reserve governor Christopher Waller, often viewed as a dove on monetary policy. He said the central bank still had room to cut interest rates against a softening jobs market.
The next significant report will be consumer inflation data on Dec 18 by the Commerce Department.
Declining issues outnumbered advancers by a 1.5-to-1 ratio on the NYSE. There were 135 new highs and 104 new lows on the NYSE. On the Nasdaq, 1,496 stocks rose and 3,162 fell as declining issues outnumbered advancers by a 2.11-to-1 ratio.
The S&P 500 posted 12 new 52-week highs and no new lows while the Nasdaq Composite recorded 85 new highs and 175 new lows.
Volume on US exchanges was 17.92 billion shares, compared with the 16.97 billion average for the full session over the last 20 trading days. REUTERS
