Wall Street Drops Sharply as Tech and AI Stocks Lead Broad Market Selloff
Wall Street suffered its worst session in three months as tech and AI shares tumbled, driven by inflation concerns and massive infrastructure spending fears.
Wall Street closed sharply lower as technology and artificial intelligence stocks drove the worst session for major indexes in roughly three months. The Nasdaq tumbled about 1.9%, the S&P 500 dropped 1.2%, while the Dow Jones managed a more moderate decline of 0.2%.
The drop in the S&P 500 broke an exceptional streak of 53 trading sessions without a daily retreat exceeding 1%. Beneath the surface, the broader story featured sharp divergences across sectors as capital rotated out of technology and into defensive havens.
Tech Selloff and Debt Concerns
CoreWeave suffered one of the heaviest blows, plunging 15.46% amid investor concerns regarding heavy leverage and massive capital expenditure requirements for AI infrastructure. The company's bonds also came under severe pressure, with yields spiking toward the 15% mark during the session.
Oracle fell 8.86%, while Dell Technologies dropped 11.36%, and HPE sank 8.18% following a rating downgrade. Meta slipped 3.27% despite Guggenheim raising its price target from 700 to 850 dollars and maintaining a buy rating. Semiconductor shares also faced heavy selling, with SK Hynix dropping 6.06% and the PHLX Semiconductor Index tumbling about 4.5%.
Financials and Sector Rotation
Banking stocks added to market anxiety. Bank of America tumbled 4.67% after absorbing a 1.2 billion dollar penalty over anti-money laundering and sanctions compliance deficiencies, alongside disappointing trading revenue. Morgan Stanley fell 2.71% despite beating profit forecasts and posting equity trading revenue that topped expectations by 909 million dollars. In contrast, JPMorgan Chase rose 1.13%, supported by an optimistic forward outlook.
Healthcare stocks emerged as a primary safe haven. Eli Lilly surged 3.75%, AbbVie climbed 3.43%, Amgen gained 3.21%, and AstraZeneca added 0.62% as capital flowed rapidly away from tech.
"The divergence between winners and losers on Wall Street was far sharper than the headline index movements suggest, reflecting a fundamental reassessment of AI infrastructure spending and balance sheet leverage."
Berkshire Hathaway extended its winning streak to ten consecutive sessions, gaining 1.19% amid optimism surrounding CEO Greg Abel and signs of deploying cash reserves. Energy giants also hit record intraday highs before trimming gains, supported by oil prices remaining elevated as WTI settled up 1.02% at 95.10 dollars a barrel.
