AI Stocks Weaken As Bond Yields Rise Again

Wall Street is pulling back from its record high as AI stocks take a hit. The S&P 500 fell 0.5% on Tuesday, marking its third straight modest loss since setting its all-time high last Thursday. This decline was led by AI-focused companies such as Micron Technology, which dropped 7%, and Nvidia, which fell 2.4%. Broadcom sank 2.9%.

These stocks have been volatile this summer due to concerns that their prices surged too high during the AI boom and that demand for data center components may decline if AI proves less profitable than anticipated. Despite their recent swings, these companies remain big winners, with Micron more than tripling in value this year.

The bond market played a significant role in the stock market's performance on Tuesday, as high yields made investors hesitant to pay high prices for stocks and other investments, particularly those seen as expensive. The 10-year U.S. Treasury yield edged down to 4.71% from 4.72%, but remained above its pre-war level of 3.97%. The 30-year Treasury yield also ticked lower but remains near its highest level since 2007.