S&P 500 Ends Lower, AI Stocks Buoy Nasdaq
ETMarkets.com
Indian markets experienced a mixed trend as the S&P 500 index closed lower, primarily due to losses within the financial sector. On Wednesday, the S&P 500 declined, weighed down by drops in major financial stocks like JPMorgan and Blackstone. In contrast, Nvidia and Alphabet provided support to the Nasdaq as investors flocked to AI-related stocks.
Market Performance Overview
– The S&P 500 fell 0.34%, closing at 6,920.93 points.
– The Nasdaq rose by 0.16%, ending at 23,584.28 points.
– The Dow Jones Industrial Average decreased by 0.94%, closing at 48,996.08 points.
This decline in the S&P 500 and the Dow Jones followed intraday record highs achieved earlier in the session. Notably, shares of housing acquisition companies saw a significant drop after President Donald Trump proposed a ban on Wall Street investors from purchasing single-family homes to help reduce home prices.
Market Movers
Top Gainers in the S&P 500:
– Intel: $42.63 (6.47%)
– Regeneron Pharmaceuticals: $812.27 (4.60%)
– Solstice Advanced Mat: $51.98 (4.52%)
– CrowdStrike Holdings: $478.91 (4.49%)
Top Losers in the S&P 500:
– First Solar: $241.11 (-10.29%)
– Skyworks Solutions: $59.82 (-9.73%)
– Western Digital: $199.88 (-8.89%)
– Vistra: $154.60 (-8.81%)
Blackstone and Apollo Global Management dropped over 5%, contributing to a 1.4% decrease in the financials index. American Homes 4 Rent decreased 4.3%, while Zillow climbed over 2%. Following a downgrade by Wolfe Research, JPMorgan Chase fell 2.3% from its previously rated outperform to peer perform.
Insights on AI Stocks
Despite the fluctuations in traditional markets, the trend of investing in AI technology remains strong. Notable tech giants like Nvidia and Microsoft each saw increases of about 1%, while Alphabet’s stock rose by more than 2%. Investors’ renewed interest in AI stocks can be attributed to worries about overvaluation being dismissed as Anthropic plans to raise multibillions, aiming to value the company at $350 billion, surpassing many established corporations.
Jake Dollarhide, CEO of Longbow Asset Management, noted, Investors have entered 2026 with a similar strategy as last year: Buy tech and hold. The fears regarding the AI trade have proven unfounded.
As we move into the fourth-quarter earnings season, Wall Street’s valuations remain elevated. The S&P 500 currently trades at approximately 22 times expected earnings, down from 23 in November but still above its five-year average of 19.
Economic Context and Future Outlook
Data released on Wednesday indicated that U.S. job openings fell more than anticipated in November following a slight increase in October. A separate ADP report showed private payroll growth was less than expected in December. These labor market metrics come after the disruption caused by the U.S. government shutdown, yet they have not significantly changed expectations of impending interest rate cuts from the Federal Reserve.
In geopolitical news, the U.S. seized a Russian-flagged tanker linked to Venezuela, part of Trump’s bold energy strategies aimed at altering oil flows in the Americas.
Lastly, technology stocks that specialize in memory and storage experienced corrections after a recent rally. Western Digital plummeted nearly 9%, while Seagate Technology faced a 6.7% decrease. First Solar fell 10% due to a downgrade from Jefferies.
In summary, declining stocks in the S&P 500 outnumbered gaining ones by a 3.4-to-one ratio. The market recorded 28 new highs and 17 new lows within the S&P 500, while the Nasdaq reported 106 new highs and 58 new lows. Trading volume on U.S. exchanges was robust, with 17.4 billion shares exchanged, surpassing the average of 16.2 billion shares over the prior 20 sessions.