U.S. stocks ended lower on Wednesday, with the S&P 500 and the Nasdaq hitting their three-week lows, as investors continued to dump artificial intelligence (AI) stocks. All three major indexes ended in negative territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 0.5% or 228.29 points, to close at 47,885.97 points.
The S&P 500 slid 1.2%, or 78.83 points, to end at 6,721.43 points. Tech, industrials and consumer discretionary stocks were the worst performers.
The Information Technology Select Sector SPDR (XLK) fell 2.2%, while the Industrials Select Sector SPDR (XLI) lost 1.6%. The Consumer Discretionary Select Sector SPDR (XLY) declined 1.2%. However, the Energy Select Sector SPDR (XLE) gained 2.2%. Seven of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq tumbled 1.8%, or 418.14 points, to finish at 22,693.32 points.
The fear gauge, CBOE Volatility Index (VIX), was up 6.92% to 17.62. Decliners outnumbered advancers on the NYSE by a 1.5-to-1 ratio. On the Nasdaq, a 2.11-to-1 ratio favored declining issues. A total of 17.92 billion shares were traded on Wednesday, higher than the last 20-session average of 16.97 billion.
On the Nasdaq, there were 1,496 new 52-week highs and 3,162 new lows. On the NYSE, there were 135 new 52-week highs and 104 new lows.
Tech Turmoil Continues, Led by AI Stocks
Investors continued to rotate out of the high-value AI stocks on Wednesday, fueled by a report that said Oracle Corporation’s (ORCL) largest data center partner, Blue Owl Capital Inc. (OWL), has decided not to back a $10 billion deal for its next data center in Michigan.
Oracle later refuted the report and said that the project is on track. However, the company’s shares declined 5.4%. Oracle carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This saw other AI stocks taking a hit on Wednesday. Concerns that the broader technology industry is piling on debt to fund AI development have recently made investors more cautious and dampened appetite for risk.
Oracle’s decline had a ripple effect on other AI-focused stocks. Shares of Broadcom Inc. (AVGO), another company that has led the rotation out of the high-flying AI stocks, also ended 4.5% lower on Wednesday.
Also, shares of Amazon.com, Inc. (AMZN) fell 0.6% after the company said that it is holding o talks to invest $10 billion in OpenAI.
December, so far, has been a difficult month for AI stocks, with Broadcom and Oracle giving up more than 11% combined as investors continued to dump riskier assets and settle for value stocks.
Investors are now looking forward to the key consumer price index reading, which will be out on Thursday morning, and will somewhat help them gauge the Federal Reserve’s monetary policy outlook for 2026.
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Amazon.com, Inc. (AMZN): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report Blue Owl Capital Inc. (OWL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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