Nasdaq nears one-month low as AI stocks slide on rate fears
The Nasdaq fell to near one-month lows on Thursday as concerns that higher interest rates could hurt artificial-intelligence investments deepened a sell-off in AI-linked stocks. Fresh data also confirmed building price pressures in the US economy, weighing on broader market sentiment.
The Nasdaq Composite slid to near one-month lows on Thursday as fears that higher interest rates could dent artificial-intelligence investments deepened a rout in AI-linked stocks, while fresh data confirmed price pressures were building in the US economy.
At 09:30 a.m., the Dow Jones Industrial Average rose 266.74 points, or 0.52 per cent, to 51,888.22, while the S&P 500 lost 33.35 points, or 0.43 per cent, to 7,685.59. The Nasdaq Composite fell 329.86 points, or 1.24 per cent, to 26,363.01.
The decline in the tech-heavy index came as investors grew increasingly worried that persistently elevated borrowing costs could slow the pace of spending on artificial-intelligence infrastructure and development, a key driver of recent market gains.
Fresh economic data released on Thursday showed continued price pressures in the US economy, reinforcing expectations that the Federal Reserve may keep interest rates higher for longer. That outlook weighed on growth-oriented technology shares, which are more sensitive to changes in discount rates.
The divergence between the Dow and the Nasdaq highlighted the rotation out of high-valuation tech names into more defensive sectors, as traders reassessed the risk posed by a prolonged period of tight monetary policy.
Market participants are now closely watching upcoming Fed communications and inflation readings for further clues on the path of interest rates, with the AI sector seen as particularly vulnerable to any sustained rise in borrowing costs.