U.S. stocks ended lower for the third straight session on Thursday, dragged down by Oracle, while fresh economic data raised doubts over future rate cuts by the Federal Reserve. All three major indexes ended in negative territory.
The Dow Jones Industrial Average (DJI) declined 0.4% or 173.96 points, to end at 45,947.32 points.
The S&P 500 fell 0.5%, or 33.25 points, to close at 6,604.72 points. Healthcare, consumer discretionary, materials and utility stocks were the worst performers.
The Health Care Select Sector SPDR (XLV) lost 1.7%. The Consumer Discretionary Select Sector SPDR (XLY) fell 1.4%. The Materials Select Sector SPDR (XLY) gave up 1.3%, while the Utilities Select Sector SPDR (XLU) declined 1%. Ten of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq declined 0.5%, or 113.16, to finish at 22,384.70.
The fear gauge, CBOE Volatility Index (VIX), was up 3.64% to 16.74. Decliners outnumbered advancers on the NYSE by a 3.11-to-1 ratio. On the Nasdaq, a 3-to-1 ratio favored declining issues. A total of 19.58 billion shares were traded on Thursday, higher than the last 20-session average of 17.99 billion.
On the Nasdaq, there were 1,166 new highs and 3,502 new lows. On the NYSE, there were 110 new highs and 109 new lows.
Concerns have been growing over the monetization of the massive investments by hyperscalers in artificial intelligence companies. Tech stocks, especially those focused on AI, have been largely responsible for the broader market rally over the past couple of years.
The bull run has continued into this year, with hyperscalers ramping up data center builds to meet the surging demand for cloud services. However, companies that heavily integrate AI into their end products have turned into multi-baggers over the past three years, with share prices soaring more than 250% during this stretch.
Investors are now concerned about the record-high valuations of these AI companies after some recent developments, which have been denting their sentiment. Shares of Oracle Corp. (ORCL) declined 5.6% on Thursday, for the third straight session.
The company has now lost more than 16% from its recent high. Also, shares of Tesla, Inc. (TSLA) declined 4.4%. Oracle has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Federal Reserve cut interest rates by 25 basis points last week on concerns over a shrinking labor market. The central bank also hinted at two more rate cuts of a quarter-basis-point each this year.
