AI Stocks Pull Wall Street Back from Record High

Wall Street is retreating from its all-time high after AI stocks took another hit on Tuesday. The S&P 500 dropped 0.5% and is on track for a third straight modest loss, while the Dow Jones Industrial Average was down 33 points, or 0.1%, as of 10:15 a.m. Eastern time.

The main culprits behind the decline were AI-related stocks, which have been veering up and down this summer due to concerns that their prices shot too high in the AI frenzy. Micron Technology led the way lower, dropping 5.9%, while Nvidia fell 2.5% and Broadcom sank 3.7%. Despite recent swings, these stocks remain big winners, with Micron more than tripling this year.

The bond market is playing a significant role in the decline, as high yields are making investors less willing to pay high prices for expensive stocks. The yield on the 10-year U.S. Treasury edged down to 4.71% from 4.72% late Monday but remains well above its 3.97% level from before the war with Iran began.

Other notable losers included Klarna, which fell 20.5% despite reporting stronger results for the latest quarter than analysts expected. Meta Platforms also declined, down 3.8%, ahead of a pivotal trial in a California federal court where states are seeking billions of dollars in damages for social media harms to children.