U.S. Stocks Extend Yesterday's Pullback As Nvidia, Oracle Slump

(RTTNews) - After coming under pressure over the course of the previous session, stocks saw further downside during trading on Wednesday. The major averages showed a lack of direction early in the session but slid more firmly into negative territory as the day progressed.

The major averages finished the day off their worst levels but still moderately lower. The Dow slid 171.50 points or 0.4 percent at 46,121.28, the Nasdaq fell 75.62 points or 0.3 percent to 22,497.86 and the S&P 500 dipped 18.95 points or 0.3 percent to 6,637.97.

The extended pullback on Wall Street may partly have reflected uncertainty about the near-term outlook for the artificial intelligence trade following yesterday's weakness.

AI darling and market leader Nvidia (NVDA) slid by 0.9 percent after tumbling by 2.8 percent on Tuesday, while fellow AI player Oracle (ORCL) slumped by 1.7 percent.

Concerns about valuations may also have continued to weigh on the markets after comments from Federal Reserve Chair Jerome Powell suggesting he believes stocks may be overvalued.

During comments at an event in Rhode Island on Tuesday, Powell described equity prices as "fairly highly valued" following the recent run to record highs.

Traders also continue to express some uncertainty about the outlook for interest rates, with Powell saying that near-term risks to inflation are tilted to the upside and risks to employment to the downside, which he called a "challenging situation."

Powell warned there is "no risk-free path" for rates, noting that cutting rates too aggressively could "leave the inflation job unfinished" but leaving rates too high for too long could unnecessarily lead to labor market weakness.

Sector News

Computer hardware stocks moved sharply lower over the course of the session, with the NYSE Arca Computer Hardware Index tumbling by 2.3 percent after ending Tuesday's trading at a record closing high.

Significant weakness also emerged among gold stocks amid a pullback by the price of the precious metal, resulting in a 2.2 percent slump by the NYSE Arca Gold Bugs Index.

Airline stocks also came under pressure as the day progressed, dragging the NYSE Arca Airline Index down by 1.6 percent.

Networking, brokerage and telecom stocks also saw notable weakness, while energy stocks bucked the downtrend amid a continued surge by the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. Japan's Nikkei 225 Index rose by 0.3 percent and Hong Kong's Hang Seng Index jumped by 1.4 percent, while Australia's S&P/ASX 200 Index slid by 0.9 percent.

The major European markets also ended the day mixed. While the French CAC 40 Index fell by 0.6 percent, the German DAX Index crept up by 0.2 percent and the U.K.'s FTSE 100 Index increased by 0.3 percent.

In the bond market, treasuries moved back to the downside following the strength seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 2.7 basis points to a nearly three-week closing high of 4.147 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, durable goods orders and existing home sales.