Further declines in AI stocks sent U.S. markets lower on Wednesday, sending Wall Street into the red for the fourth consecutive quarter.
The S&P 500 fell 1.2%, its lowest point in nearly a month, but still not far from its all-time high hit last week. The Dow Jones Industrial Average fell 228 points, or 0.5%, and the Nasdaq Composite Index fell 1.8%.
Slightly more advancers than decliners in the S&P 500 were offset by declines in companies in the artificial intelligence industry.
Questions haunt the former superstars: whether their years of dominating Wall Street have driven prices too high, and whether all their investments in AI will generate enough returns and productivity to justify their costs. Concerns have also been raised about the debt some companies are taking on to pay their bills in full.
Broadcom fell 4.5%, Oracle fell 5.4% and Coreweave fell 7.1%. Semiconductor company Nvidia, whose sheer size has made it Wall Street’s most influential stock, fell 3.8%, making it the most heavily weighted S&P 500 stock on the day.
Power companies, which soared at the beginning of the year on hopes of increased demand from power-hungry data centers, have lost some of their luster. Constellation Energy fell 6.7%.
In a UBS survey of larger companies, only 17% of respondents said they were running AI projects at scale. Although that rate continues to rise, it could serve as a “reminder for tech investors to remain calm about the potential for revenue growth from AI products in 2026,” according to UBS analysts.
Also losing on Wall Street was Lennar, which fell 4.5% after reporting mixed profits. The homebuilder’s latest quarter’s profit was lower than analysts expected, even though sales beat expectations.
Executive chairman Stuart Miller said the situation remained challenging, with customers looking for discounts and more affordable options but lacking confidence. As a result, the company provided limited guidance regarding its future financial performance.
Progressive, meanwhile, fell 2% after the Mayfield Village, Ohio-based insurer announced a 5% drop in November net income from a year earlier.
After President Donald Trump ordered a blockade of all “sanctioned oil tankers” entering Venezuela, it was oil companies who won on Wall Street. This is President Trump’s latest escalation against Venezuela, which may have more oil than any other country.
As a result, the price of benchmark U.S. crude oil rose 1.2% to $55.94 per barrel. Just one day after falling to its lowest since 2021, international standard Brent crude rose 1.3% to $59.68 per barrel.
ConocoPhillips rose 4.6% on the day, narrowing an 8.5% loss to begin the year. Devon Energy rose 5.3% and Exxon Mobil rose 2.4%.
Oil prices have been falling through much of this year on expectations that companies are pumping more than enough oil to meet global demand.
Netflix rose 0.2% after Warner Bros. Discovery’s board said it still recommends shareholders approve the streaming giant’s takeover offer for the Warner Bros. business rather than competing with Paramount Skydance’s hostile takeover of the entire company.
Warner Bros. Discovery fell 2.4% and Paramount Skydance fell 5.4%.
Overall, the S&P 500 fell 78.83 points to 6,721.43. The Dow Jones Industrial Average fell $228.29 to $47,885.97, and the Nasdaq Composite Index fell $418.14 to $22,693.32.
In the bond market, U.S. Treasury yields held relatively steady ahead of Thursday’s report showing just how bad inflation is for U.S. consumers.
As of late Tuesday, the 10-year U.S. Treasury yield held steady at 4.15%.
In overseas stock markets, indexes were mixed in European markets as well, following a strong finish in Asian markets.
South Korea’s Kospi soared 1.4% in one of the world’s biggest risers, narrowing its decline to 2.7% so far this week.
Cho writes for The Associated Press.
