Speaking to reporters, Fed chief Kevin Warsh said spending on AI was laying the groundwork for future growth. AI-related chipmakers added to recent losses after a sixfold jump in SK Hynix’s quarterly profit fell short of lofty investor expectations.
The South Korean company’s shares fell 10 per cent. AI infrastructure company Vertiv slumped 17 per cent after missing quarterly revenue expectations.
The S&P 500 declined 1.52 per cent to end the session at 7,316.15 points.
The Nasdaq declined 1.74 per cent to 24,442.94 points, while the Dow Jones Industrial Average declined 2.19 per cent to 51,594.14 points. Eight of the 11 S&P 500 sector indexes declined, led lower by industrials, down 3.24 per cent, followed by a 2.5 per cent loss in information technology.
Analysts on average expect S&P 500 aggregate second-quarter earnings to jump 40 per cent from a year ago, with AI-related stocks accounting for much of that growth, according to LSEG.
Strong earnings forecasts and Wall Street’s recent decline have left the S&P 500 trading at about 20 times expected earnings, just above its 10-year average of 19, according to LSEG data.
Ford Motor gained 2.1 per cent after raising its annual profit outlook for a second time this year.
Lennox tumbled 21 per cent after the HVAC solutions maker lowered its annual profit forecast.
Visa rose 0.6 per cent after the company beat estimates for quarterly profit, helped by World Cup-fueled travel demand. Declining stocks outnumbered rising ones within the S&P 500 by a 1.8-to-one ratio.
The S&P 500 posted 32 new highs and four new lows; the Nasdaq recorded 121 new highs and 230 new lows. Volume on US exchanges was relatively heavy, with 17.7 billion shares traded, compared to an average of 17.3 billion shares over the previous 20 sessions.
