Wall St slides as tech rally stalls, AI enthusiasm wanes after Nvidia results

U.S. stock indexes ⁠turned ⁠sharply lower on Thursday, the day after ⁠a less-than-stellar earnings report from artificial intelligence vanguard Nvidia dragged technology shares which have provided muscle ​to the recent rally.

A pivot back to cyclical sectors helped limit the Dow’s losses, while a 3.6% drop in the Philadelphia SE Semiconductor index ‌helped drag the tech-laden Nasdaq down 1.5%.

With ‌Thursday’s drop, the SOX, which has surged 15.3% year-to-date, is on the verge of snapping what would have been a record 11-week winning ⁠streak.

Technology shares in ⁠general, and software and chips in particular, have see-sawed in recent weeks as investors ​wrestle with uneasiness over the massive costs and potential disruption of nascent AI technology.

While all three major U.S. stock indexes are on track for modest weekly losses, the S&P 500 and the Nasdaq are poised to close lower on the month. The Dow remains on track to post an advance in ​February.

Nvidia’s fourth-quarter results, posted after Wednesday’s closing bell, were better than analysts expected, and the chipmaker provided above-market estimates. But ⁠the ⁠world’s richest company by market cap ⁠wrestled with increasingly difficult ​year-on-year comparisons as its revenue growth decelerates. Its shares were down 4.9%.

“Nvidia’s results, while they were good and showed substantial ​growth year-over-year, they did not hit ⁠the high end of some people’s expectations,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “Now the news is over and there’s probably a little bit of profit taking and we’re seeing money now rotate back to the victims from earlier in the week, the software companies that were portrayed to be the ultimate victims of AI.”

The Dow Jones Industrial Average fell 26.44 points, or 0.05%, to 49,449.13, the S&P 500 ⁠lost 51.00 points, or 0.73%, to 6,895.13 and the Nasdaq Composite lost 335.80 points, or 1.45%, to 22,816.28.

Among the ⁠11 major sectors of the S&P 500, tech and communication services suffered the steepest percentage losses, while financials led the gainers, rising 1.0% on the strength of big bank shares, including JPMorgan Chase, Bank of America and Wells Fargo.

The S&P 500 software and services index, battered in recent weeks on worries over AI-related disruption, gained 0.9%, boosted by a 3.1% increase in Salesforce shares, even though the company provided weaker-than-expected revenue guidance. 

Trade Desk slid 3.9% following its disappointing revenue forecast amid mounting pressure from larger rivals.

J.M. Smucker surged 9.1% on the packaged food company’s solid quarterly profit and sales estimates. 

C3.ai tumbled 19.3% after it provided a weaker-than-expected current quarter sales forecast and announced it would slash 26% of its global workforce.

Celsius ⁠Holding jumped 7.1% after the energy drink maker beat quarterly revenue estimates.

Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE. There were 310 new highs and 63 new lows on the NYSE.

On the Nasdaq, 2,069 stocks rose and 2,574 fell as declining issues outnumbered advancers by a 1.24-to-1 ratio. 

The S&P 500 posted 35 new 52-week highs and one new low while ​the Nasdaq Composite recorded 74 new highs and 80 new lows.