Dow Jones down 1,000 points from record highs as AI-linked sell-off resumes on Wall Street

Wall Street had yet another session marred by a sell-off in AI-linked names on Wednesday, led by Oracle, which dragged indices lower from their respective intraday highs.

The Dow Jones ended 230 points lower, after giving up over 500 points from the highs of the day. The S&P 500 fell 1.2%, while the Nasdaq saw losses of 1.8% led by losses in most AI-linked names. Both the S&P 500 and the Nasdaq closed below their respective 50-Day Moving Average (DMA).

With Wednesday's drop, the Dow Jones is now down 1,000 points from last Friday's intraday record of 48,886. The S&P 500 is down 200 points from those levels, while the Nasdaq is down 1,300 points from its respective record peak.

Wednesday's fall was triggered by a report in the Financial Times that one of Oracle's key data center backers in Michigan had backed out of a $10 billion deal. The company later went on to deny the report, stating that the negotiations are on track for the project financing, but it is not with the said partner. Oracle's shares fell 5% on the report, leading to a drop in solidarity from Nvidia, AMD, Broadcom and CoreWeave, all of which fell between 4% to 8%.

Futures though, have begun trading with modest gains after stronger-than-expected results and guidance from AI equipment supplier Micron, shares of which rose 8% in extended trading, indicating that the AI-linked concerns may be company specific and not an industry-wide issue.

Sentiments did not receive any support from Fed Governor Christopher Waller either, who said that while there is room for interest rates to go down, there is no need to rush as inflation still remains high. Waller, one of the contenders to succeed Jerome Powell as the next Fed Chair, also vowed maintaining Central Bank independence from any political interference in case he is appointed to the post.

All eyes today will be on the November CPI release, which will be a delayed one due to the government shutdown. Economists see complications in releasing month-on-month numbers as data for October could not be collected. However, economists polled by the Wall Street Journal expect November CPI to rise by 0.3% from October and 3.1% from last year.

The US Dollar index is managing to hold on to levels of 98, while Gold prices are nearing the $4,400 an ounce mark. Silver made another record high this morning, nearing $67 an ounce, while oil prices have staged a rebound from 2021-lows, after the US said that it will impose tougher sanctions on Russia if it does not accept the Ukraine peace deal.