Nasdaq Pulls Back Sharply As AI Concerns Resurface

(RTTNews) - After trending higher over the past few sessions, stocks showed a substantial move back to the downside during trading on Thursday. The tech-heavy Nasdaq led the way lower, tumbling to its lowest closing level in over a month.

The Nasdaq and S&P 500 ended the day just off their lows of the session. The Nasdaq plunged 694.00 points or 2.6 percent to 26,008.86 and the S&P 500 slumped 93.74 points or 1.2 percent to 7,663.43.

The narrower Dow, on the other hand, spent the day bouncing back and forth across the unchanged line before closing up 11.89 points or less than a tenth of a percent at 52,867.98.

The sharp pullback on Wall Street came as tech stocks came under pressure amid renewed concerns about debt-fueled AI infrastructure spending.

Traders' level of concern about the artificial intelligence trade seems to shift on a daily basis, contributing to substantial volatility in the markets.

The latest resurgence of worries may be in reaction to comments from Nvidia (NVDA) CEO Jensen Huang, who told CNBC that demand for neocloud firms like CoreWeave (CRWV) is "off the charts" but "scarcity of capital" is holding back growth.

A steep drop by shares of Meta Platforms (META) also weighed on the tech sector, with the Facebook parent plunging by 7.1 percent despite reporting third quarter revenues that exceeded estimates and providing upbeat guidance.

"Once people got their heads around the fact Meta needs to raise large sums to sustain its participation in the AI arms race, they lost their initial enthusiasm for the better-than-expected revenue posted by the company and the rapid take-up of its Muse AI agent," said AJ Bell head of financial analysis Danni Hewson.

Shares of Tesla (TSLA) also tumbled by 3.4 percent after surging by 3.8 percent on Wednesday even though the electronic vehicle maker reported better than expected third quarter results.

The weakness on Wall Street also came amid a notable increase in the price of crude oil, as U.S. crude oil futures jump by more than 2 percent.

U.S. crude oil futures had spiked even higher earlier in the day after President Donald Trump denied the U.S. is negotiating with Iran and said "something one way or the other" will "happen fairly soon."

A report from the New York Times also said the U.S. and Israel have drawn up specific plans for renewed strikes on Iran after Election Day.

Sector News

Semiconductor stocks turned in some of the market's worst performances on the day, with the Philadelphia Semiconductor Index plummeting by 6.7 percent to its lowest closing level in almost three months.

A steep drop by the price of gold also contributed to substantial weakness among gold stocks, as reflected by the 5.4 percent nosedive by the NYSE Arca Gold Bugs Index.

Oil service stocks also saw significant weakness despite the jump in crude oil prices, dragging the Philadelphia Oil Service Index down by 3.7 percent.

Networking and computer hardware stocks also showed notable moves to the downside, while housing stocks soared amid a steep drop in treasury yields, resulting in a 4.6 percent spike by the Philadelphia Housing Sector Index.

Interest rate-sensitive telecom and utilities stocks also saw considerable strength, while pharmaceutical and transportation stocks benefited from a rotation out of the tech sector.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index plunged by 2.7 percent, while China's Shanghai Composite Index slumped by1.5 percent.

The major European markets also moved to the downside on the day. While the French CAC 40 Index tumbled by 1.4 percent and the German DAX Index slid by 1.1 percent, the U.K.'s FTSE 100 Index posted a more modest loss, dipping by 0.3 percent.

In the bond market, treasuries skyrocketed due to their appeal as a safe haven amid the sell-off on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, has plunged 19.3 basis points to 4.953 percent.