NEW YORK (AP) 鈥� Another sell-off for stocks helped drag the U.S. market sharply lower Wednesday, as Wall Street鈥檚 former superstars continue to face heavy scrutiny for their success.
The S&P 500 dropped 1.6% for its first in three weeks and is back to where it was in early May. The Dow Jones Industrial Average tumbled 953 points, or 1.9%, and the Nasdaq composite led the market lower with a 2% slide.
Wall Street has been shaky since last week, when AI stocks went from to . Among the worries is that their prices have simply shot too high, too fast because of AI mania. The question now is whether the break lower has cleared out excessive optimism that may have built into their stock prices, or if it鈥檚 the start of a longer downturn.
Super Micro Computer, which sells AI servers, tumbled 28% after saying late Tuesday that it plans to raise $7 billion in cash by selling shares of stock and convertible preferred stock. Such moves raise the most money for companies when their stock prices are high, and they can dilute the ownership stakes of existing shareholders.
Micron Technology swung from an early loss of nearly 4% to a modest gain and back to a loss of 4.7%. It鈥檚 coming off a wild stretch where it sank 7.7% last Thursday, then plunged another 13.3% Friday and rallied 9.9% Monday. Despite all the swings, the computer memory maker鈥檚 stock is still up 212.5% for the year so far.
Nvidia, the chip company that鈥檚 grown into a nearly $4.9 trillion behemoth because of the AI boom, was the heaviest weight on the S&P 500 after falling 3.7%. The second-heaviest was another AI winner, Broadcom, which fell 5.1%.
Some of the pressure on AI stocks could also be coming from investors pulling cash out to prepare for high-profile debuts on the U.S. stock market for several AI giants. could come later this week, for example.
Weakening stocks for companies with big fuel bills also pulled the market lower. United Airlines sank 6.2%, and cruise-operator Carnival fell 6.3% after oil prices rose due to the latest fighting in the war with Iran.
The price for a barrel of Brent crude oil rose 1.8% to $93.10 after would 鈥減ay the price鈥� for stalled negotiations between the two on their war. The war has been keeping the Strait of Hormuz effectively shut to oil tankers, which has prevented the delivery of crude from the Persian Gulf to customers worldwide.
High oil prices have sent inflation higher, and a report on Wednesday showed that jumped in May at the highest speed in three years.
But Treasury yields nonetheless held relatively steady in the bond market because the figures were pretty much exactly what economists had forecast. The rise in an important underlying measure of inflation, meanwhile, was not as bad from April through May as economists expected.
The yield on the 10-year Treasury edged up to 4.54% from 4.53% late Tuesday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do with its overnight interest rates, held at 4.13%.
Traders have been building bets recently that the Fed will have to hike its main interest rate at least once this year, given how high inflation is and . Wednesday鈥檚 inflation update didn鈥檛 sway them much, according to data from CME Group.
and undercut prices for all kinds of investments, including stocks and cryptocurrencies. They hit investments seen as the most expensive in particular, and some critics are calling AI a bubble where investment inflated too far.
All told, the S&P 500 fell 119.66 points to 7,266.99. The Dow Jones Industrial Average dropped 953.33 to 49,918.78, and the Nasdaq composite sank 509.32 to 25,169.50.
In stock markets abroad, indexes in Europe were mixed following sharper drops in Asia.
South Korea鈥檚 Kospi tumbled 4.5%, hurt by losses for tech giants Samsung Electronics and SK Hynix.
Tokyo鈥檚 Nikkei 225 sank 1.9% after data showed Japan鈥檚 producer price index, a measure for prices at the wholesale level, rose in May at the fastest pace in more than three years. Shares of technology and telecommunications giant SoftBank Group, which has a strong AI focus, lost 8.3%.
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AP Business Writers Chan Ho-him and Matt Ott contributed to this report.
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