US markets took a breather on Tuesday as doubts resurfaced over the sustainability of the artificial intelligence bull run. The S&P 500 slipped 0.55% to 6,656.92 after briefly touching a fresh all-time intraday peak of 6,699.52. The Nasdaq Composite dropped nearly 1% to 22,573.47, with the declines led by major AI names. The Dow Jones Industrial Average ended 88.76 points, or 0.19%, lower at 46,292.78.
Tech stocks under pressure
Nvidia shares slid 2.8%, reversing part of Monday’s surge after announcing a US$100bn investment in OpenAI. Some investors questioned whether the tie-up resembled the excesses of the dot-com bubble, while others raised concerns about energy supply for such large-scale growth. Oracle, which has soared more than 50% in three months on AI optimism, fell 4.4%. Amazon also lost ground. All seven of the so-called “magnificent seven” stocks that have powered Wall Street to record levels finished in the red.
Powell strikes cautious tone
Federal Reserve Chair Jerome Powell added to valuation worries, warning that equity prices are “fairly highly valued.” He described policy as a “challenging situation,” noting upside risks to inflation and downside risks to employment. Powell stressed there is “no risk-free path” ahead, tempering hopes for aggressive rate cuts.
Small caps and broader outlook
The Russell 2000 briefly hit an all-time high but finished 0.2% lower, underscoring the fragility of sentiment. Attention now turns to Friday’s release of the Fed’s preferred inflation measure, the PCE price index. Meanwhile, political risks are mounting as the prospect of a US government shutdown grows ahead of the September 30 deadline.
Local market
Australian shares are set to open lower. The SPI futures point to a 31-point decline, or 0.4%, at the open. Today’s key focus is the release of monthly CPI at 11:30am.
