S&P500 and Nasdaq 100: US Stocks Risk Further Selling on AI Spending Doubts

Wall Street Slides as AI Spending Doubts Knock Tech to Three-Week Lows

U.S. stocks finished Wednesday on the back foot, with the S&P 500 and Nasdaq closing at three-week lows as renewed unease around artificial intelligence funding hit big-name tech.

The selling wasn’t panicky, but it was persistent. Traders trimmed exposure where conviction has thinned, especially across chips and cloud names tied to heavy capital spending.

The Dow slipped 228 points, while the S&P 500 fell 1.16% and the Nasdaq dropped 1.81%. Breadth leaned defensive, and volume ran slightly above recent averages — a sign this wasn’t just passive drift lower.

Is the AI Trade Losing Its Shine?

The pressure started in megacap tech. Oracle slid 5.4% after reports that Blue Owl Capital won’t back a planned $10 billion data center deal. That hit a nerve. The market has been fine with big AI checks — until it isn’t.

Nvidia fell 3.8% and Broadcom dropped 4.5%, dragging the chip index down nearly 4%. The message was clear: traders are questioning how much balance sheet strain the sector can absorb before returns become harder to justify. There’s growing concern that AI spending is feeding back into itself, with OpenAI sitting at the center of the loop.

Amazon slipped 0.6% after news it’s in talks to invest roughly $10 billion in OpenAI. The deal may strengthen its AI position, but the tape treated it as another reminder that the bill is still rising.

How Are Traders Responding to the Risk?

They’re stepping back rather than chasing dips — at least for now. Decliners outpaced advancers by a wide margin, especially on the Nasdaq. This wasn’t indiscriminate selling, but positioning felt lighter as traders reassessed exposure going into year-end.

Alphabet shares fell 3.2% after reports that Google is working with Meta to challenge Nvidia’s software edge. It’s ambitious, but the market focused on execution risk and timelines rather than the long-term vision.

Outside tech, media names were mixed. Netflix edged higher after its bid for Warner Bros Discovery gained board support, while Warner Bros and Paramount slid after rejecting a hostile offer.

Can Energy and the Fed Offset Tech Weakness?

Energy stocks provided a pocket of strength. Crude prices climbed after President Trump ordered a blockade of sanctioned oil tankers linked to Venezuela. ConocoPhillips and Occidental both jumped more than 4%, offering some balance to an otherwise tech-heavy selloff.

Rates also helped steady nerves at the margin. Fed Governor Christopher Waller said the central bank still has room to cut if the labor market softens. That kept yields in check, even if it didn’t spark risk-on buying.

What’s the Setup Into Inflation Data?

The next test is Thursday’s consumer inflation report. A softer print could calm nerves around rates, but it won’t answer the bigger question hanging over tech: how sustainable all this AI spending really is.

Bottom line: the market isn’t abandoning AI, but it’s no longer giving the trade a free pass. Until confidence improves on returns, traders look content to stay selective rather than aggressive.

More Information in our Economic Calendar.