Wall Street experienced continued pressure on Tuesday as artificial intelligence (AI) stocks dipped, pulling the market further away from its all-time high set last Thursday. The S&P 500 recorded a decline of 0.7%, marking its third consecutive decrease. The Dow Jones Industrial Average went down slightly by 116 points, while the Nasdaq Composite fell by 1.3%.
Stocks that have previously soared due to AI technology were notably lower. Concerns have arisen over potentially inflated pricing driven by AI excitement and the uncertainty about whether the demand for components like memory and processors will continue if AI fails to meet profitability expectations. Micron Technology, a company specializing in computer memory, dropped 7% and impacted the S&P 500 significantly. Other chip companies such as Nvidia and Broadcom also saw declines of 2.3% and 3.2%, respectively.
Despite the recent volatility, these stocks remain major gainers, with Micron having tripled its value this year. However, when interest rates are high, stocks considered overpriced come under greater scrutiny. On Tuesday, worldwide bond markets maintained high yields, although slightly reduced. The U.S. Treasury’s 10-year yield decreased to 4.70%, remaining elevated compared to its previous level before the conflict involving Iran began. Similarly, the 30-year Treasury yield is near its highest point since 2007.
Increases in yield are attributed primarily to elevated oil prices raising inflation concerns. Additionally, worries about governmental debt levels and borrowing further contribute to persistent high yields. Rising yields tend to reduce investor inclination to pay higher prices for stocks deemed expensive.
Oil’s impact on yield pressure remains notable, with Brent crude oil adding 0.2% to reach $91.02 per barrel. Fluctuations stem from uncertainty surrounding a potential agreement between the U.S. and Iran regarding oil taker movements in the Persian Gulf. Brent crude’s price was significantly lower at $72.87 per barrel preceding the conflict.
Mortgage rates have correspondingly risen, impacting the housing sector. Recent reports indicate a decrease in housing starts, a factor that influenced Home Depot’s stock to decline slightly by 0.1%. Despite reporting higher than anticipated profits, CFO Richard McPhail noted a trend toward smaller customer projects.
High yields may impede Big Tech’s borrowing for data centers, a critical growth factor for the economy. Meanwhile, Klarna, a buy-now, pay-later company, saw a drop of 22.8% due to revised financial forecasts for 2026 influenced by expectations in Germany, their largest market.
Meta Platforms fell 4.4% amid opening statements in a major trial regarding social media impacts on children. Overall market numbers included a 53.30 point decrease for the S&P 500 ending at 7,691.76. The Dow Jones fell 116.38 points to reach 53,343.40, and the Nasdaq sank by 355.20 to settle at 26,289.71.
Internationally, stock markets in Europe and Asia presented mixed results. South Korea’s Kospi Index declined 1.5%, following more volatile movements seen in recent days. The large presence of tech companies Samsung Electronics and SK Hynix in Seoul’s market contributes to notable AI-induced variability.
AP Business Writer Yuri Kageyama contributed to this report.