U.S. stocks closed lower on Tuesday, backing away from record closing highs as renewed concerns over the artificial intelligence boom weighed on technology stocks days before five of the sector’s most high-profile companies were due to post quarterly results. Semiconductor shares .SOX, which have surged over 40% so far this year, weighed particularly heavily on the Nasdaq, which suffered its biggest daily percentage loss in a month.
OpenAI missed internal targets for weekly users and revenue, raising concerns over the AI heavyweight’s ability to support its massive spending on data centers, according to a report from the Wall Street Journal. Shares of Oracle ORCL.N, whose reliance on OpenAI for its cloud computing ambitions has been under scrutiny, fell 4.1%. Chip stocks also dropped, with Nvidia NVDA.O, AMD AMD.O and Broadcom AVGO.N down between 1.6% and 4.4%. Nvidia-backed CoreWeave CRWV.O slid 5.8%.
First-quarter earnings season shifts into overdrive this week, with five of the companies in the Magnificent Seven group of AI-related megacap firms expected to post results. On Wednesday, Alphabet GOOGL.O, Amazon AMZN.O, Meta Platforms META.O and Microsoft MSFT.O are slated to report, with Apple AAPL.O on deck for Thursday. The companies expected to report this week account for about 44% of the S&P 500’s total market capitalization, according to Raymond James.
General MotorsGM.N GM.N advanced 1.3% after the automaker beat quarterly profit estimates and lifted its full-year earnings forecast, boosted by a resilient U.S. car market and an expected tariff refund. United Parcel ServiceUPS.N UPS.N shares dropped 4.0% after the package delivery company reiterated its full-year revenue target as spiking fuel costs offset underlying business improvement. Coca-ColaKO.N KO.N rose 3.9% following its better-than-expected quarterly report. The beverage giant played down the impact of high oil prices and raised its annual earnings target.
The Dow Jones Industrial Average .DJI .DJI fell 25.86 points, or 0.05%, to 49,141.93, the S&P 500 .SPX .SPX lost 35.11 points, or 0.49%, to 7,138.80 and the Nasdaq Composite .IXIC .IXIC lost 223.30 points, or 0.90%, to 24,663.80. Of the 11 major sectors in the S&P 500, tech .SPLRCT .SPLRCT shares were down the most, while energy .SPNY .SPNY enjoyed the biggest percentage gain.
The U.S. Federal Reserve has convened for what is likely to be Jerome Powell’s last monetary policy meeting as chair of the central bank. While the Fed is likely to leave its key interest rate unchanged on Wednesday, the accompanying statement and Powell’s subsequent press conference will be parsed for policymakers’ views on inflation risk related to the war-related energy price spike.
The U.S. President said he is unhappy with Iran’s latest peace proposal because it would delay negotiations on the nuclear issue, dampening optimism that the conflict, which has rattled world markets and sent energy prices soaring, could be close to resolution. In another blow to oil-exporting countries, the United Arab Emirates announced on Tuesday it was withdrawing from OPEC. Crude pricesCLc1 spiked, reviving inflation worries and contributing to risk-off sentiment.
Declining issues outnumbered advancers by a 1.66-to-1 ratio on the NYSE. There were 179 new highs and 42 new lows on the NYSE. On the Nasdaq, 1,707 stocks rose and 3,004 fell as declining issues outnumbered advancers by a 1.76-to-1 ratio. The S&P 500 posted three new 52-week highs and 14 new lows while the Nasdaq Composite recorded 104 new highs and 95 new lows. Volume on U.S. exchanges was 15.48 billion shares, compared with the 18.11 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp; Additional reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Aurora Ellis.
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