The Nasdaq and S&P 500 fell on Wednesday as investors sold tech stocks and moved into less highly valued sectors, as they also awaited remarks from Federal Reserve officials at their Jackson Hole symposium this week.
Tech stocks, which drove much of the recovery from Wall Street’s April selloff, have been pulling back. The S&P 500 technology index was down on the day, while sectors such as energy, healthcare and consumer staples rose.
“A broader lens tells you it’s more of a rotation than a true sell off,” said Allspring’s senior portfolio manager, Bryant van Cronkhite. “Tech valuations look extended in the context of inflated spending today. Number two, I would say that there are a lot of pockets of the market that look very attractive from a valuation standpoint and they’ve been broadly ignored.”
According to preliminary data, the S&P 500 lost 16.40 points, or 0.26%, to end at 6,394.97 points, while the Nasdaq Composite lost 144.76 points, or 0.68%, to 21,170.19. The Dow Jones Industrial Average rose 1.48 points, or 0.00%, to 44,923.75.
Analysts listing other factors behind the tech sell-off mentioned OpenAI CEO Sam Altman’s comments last week about artificial intelligence stocks being “in a bubble,” and a Massachusetts Institute of Technology study that showed many tech companies were struggling to translate AI into actual profits.
Some investors also worried about government interference in the private sector. President Donald Trump’s administration is looking into taking equity stakes in chip firms such as Intel, weeks after unprecedented revenue-sharing deals with Nvidia and AMD.
Nvidia, Advanced Micro Devices, Intel and Micron fell. Nvidia’s quarterly results on August 27 are keenly awaited for clues on demand for artificial intelligence.
Other megacap growth names such as Apple and Meta also came under pressure.
Minutes from the Fed’s July meeting, where interest rates were left unchanged, showed almost all policymakers viewed it as appropriate to maintain the target range for the federal funds rate at 4.25% to 4.50%, despite two dissenters.
Fed Chair Jerome Powell is expected to speak on Friday at the central bank’s annual conference in Jackson Hole, Wyoming. His remarks will be closely watched for policy signals. Investors have been pricing in a 25-basis-point rate cut in September, according to data compiled by LSEG.
Meanwhile, investors also monitored Trump’s call for the resignation of Fed Governor Lisa Cook, with the president citing allegations that she was involved in mortgage fraud.
Earnings from big retailers, seen as a barometer for the health of the American consumer, are also due this week as sentiment has taken a hit from concerns that tariffs could drive prices higher.
Target tumbled after the company named a new CEO and retained its annual forecasts that were lowered in May.
Cosmetics giant Estee Lauder fell after tariff-related headwinds weighed on its annual profit forecast.
