AI Stocks Drag Down Wall Street as Yields Remain High

Wall Street's recent gains came to an end on Tuesday as AI stocks continued their decline. The S&P 500 fell 0.7% for a third straight modest loss, while the Dow Jones Industrial Average dipped 116 points and the Nasdaq composite sank 1.3%. These losses were led by Micron Technology, which dropped 7%, and chip companies Nvidia and Broadcom, which fell 2.3% and 3.2% respectively.

The decline of AI stocks was a major factor in the market's downturn. These stocks have been big winners in the boom around artificial-intelligence technology, but their prices have shot up too high, leading to worries that they may fizzle out if AI proves less profitable than promised. High interest rates are also contributing to the decline, as investors become more cautious and less willing to pay high prices for expensive stocks.

The rise in oil prices is another factor pushing up yields. The yield on the 10-year U.S. Treasury edged down to 4.70% from 4.72% late Monday but remains well above its 3.97% level from just before the war with Iran began. This has led to a decrease in borrowing and investment, particularly in expensive stocks like those involved in AI technology.