Another sell-off for AI stocks sends Wall Street reeling

Wall Street suffered another volatile day on Tuesday, with AI-driven stocks leading a broad market decline. The S&P 500 fell 0.9% after swinging between early gains and midday losses, while the Nasdaq composite dropped 1.7%. AI-related companies, including Micron Technology (which fell 5.1% after a 4.2% morning gain), Marvell Technology (down 10.7%), and Advanced Micro Devices (down 5.9%), drove the downturn. Nvidia’s 1.6% decline further pressured the S&P 500, as the chipmaker remains the largest company by value on Wall Street. Despite the sell-off, several high-profile AI firms are preparing for public listings. OpenAI, developer of ChatGPT, filed confidential IPO paperwork on Monday, while SpaceX may follow later this week. The market’s reaction to these filings remains uncertain amid broader concerns about overvaluation in AI stocks. Oil prices briefly eased, dropping 2.9% to $91.56 per barrel, but tensions in the Strait of Hormuz—where the U.S. accused Iran of downing an American military helicopter—kept volatility high. Rising oil costs have worsened inflation, pushing Treasury yields higher and increasing pressure on stocks. The 10-year Treasury yield dipped slightly to 4.53% but remains elevated, reflecting expectations of further Federal Reserve rate hikes. Inflation data due later in the week could influence market sentiment, with reports on consumer and wholesale prices scheduled for Wednesday and Thursday. High inflation and a strong job market suggest the Fed may raise interest rates again by year-end, which could dampen stock prices and discourage investment in AI data centers. Meanwhile, some sectors performed well, with J.M. Smucker rising 9.4% after reporting stronger-than-expected profits, driven by higher prices for coffee and baked goods. Nuvalent also surged 39.1% following a GSK acquisition announcement, though its details were cut off in the original report.