The Nasdaq and S&P 500 fell on Monday as caution around artificial intelligence weighed on technology stocks. Nvidia’s results were a particular focus for investors. Nvidia and Microsoft both closed lower, contributing to the tech sector’s decline.
This happened despite Nvidia beating analysts’ revenue estimates for the ninth quarter in a row. Investors seemed cautious ahead of future AI plans from the company. The Dow Jones Industrial Average rose slightly by 0.08%.
But the S&P 500 dropped by 0.50% and the Nasdaq Composite fell by 1.21%. In other market news, Nike’s stock price increased after Jefferies upgraded it to a “buy” rating. Berkshire Hathaway also hit a record high after reporting record profits for the fourth quarter.
Throughout the trading day, investor feelings shifted as they considered how AI developments could impact tech stocks. They also looked at traditional economic indicators.
Caution surrounding AI impacts tech stocks
As the trading day unfolded, Wall Street sold off technology stocks. Analysts at TD Cowen raised concerns about issues with at least two data center operators. The Nasdaq Composite dropped 1% in morning trading.
The S&P 500 fell 0.4%. The Dow, which has less exposure to tech, rose 31 points or 0.1%. Within the S&P 500, the technology sector declined 1.2%.
Consumer discretionary stocks fell 0.9% and communication services dropped 0.5%. These sectors all contain members of the “Magnificent Seven” megacap tech stocks. The Roundhill Magnificent Seven ETF, which tracks this group, slid 1.2%.
Investors seem to be repositioning around the artificial intelligence trade after a period of large gains driven by AI optimism. The focus is shifting to how tech companies handle challenges with data centers and other fundamentals as tech stock valuations are reassessed more broadly.
