US stocks declined for a third straight day as the pullback from chipmakers and other high-flying tech stocks overshadowed speculation that lower oil prices may ease pressure on the Federal Reserve to hike interest rates.
The S&P 500 Index ended the day 0.1% lower, testing its 50-day moving average as weakness in tech and energy stocks offset gains elsewhere. The Nasdaq 100 closed down 0.4%, while the Dow Jones Industrial Average rose 0.4%.
"Tech investors remain diffident after two sessions of aggressive selling - some dip buyers showed up earlier this morning, but they have moved to the sidelines," Vital Knowledge founder Adam Crisafulli wrote.
The drop is signaling doubts about the scale of the rally in the prices of artificial-intelligence related stocks since late March. It came ahead of results due from Micron Technology Inc., the single biggest contributor to the S&P 500's 7.5% gain this year. Daily turnover in the stock has topped $70 billion ahead of the report.
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"You're going to have these gut check moments," said Dan Ives, senior equity analyst at Wedbush Securities, in a Bloomberg TV interview on Wednesday morning. "But we continue to view these as opportunities to own the AI winners."
Crude oil prices are slipping as more tankers cross the Strait of Hormuz, with West Texas Intermediate prices falling below $70 a barrel.
Traders also parsed disappointing new home-sales figures for the month of May and weaker-than-expected building permits, which may lead to a less hawkish Fed by signaling cooling in the economy.
Despite the pullback, much of Wall Street remains bullish on the outlook for stocks this year. JPMorgan Chase & Co. strategists raised their view for the S&P 500 this year, now expecting the benchmark to end the year at 7,800 points, up from a previous target of 7,600. It's around 7,350 now.
Against a backdrop of earnings growth and peace talks between the US and Iran that are pulling down oil prices, "we are approaching our 'Blue Sky' scenario," the banks strategists led by Dubravko Lakos-Bujas wrote in a note.
This week's declines are typical of short-term hiccups, said Jennifer Bender, global chief investment strategist at State Street Investment Management.
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We expect these kinds of volatility episodes to continue," Bender said. "The shifting geopolitical landscape means that political news is less predictable, the world order is increasingly competitive and power-based, and equity markets are more highly concentrated."
Among single-stock movers, FedEx shares are falling after the company offered its first earnings report since spinning off its freight division but said inflation and trade turmoil would provide a challenge.
Wendy's shares soared as stock climbed the ranks in Stocktwits and Reddit's widely-followed Wallstreetbets forum.
Sectors in Focus
- Watch chipmakers Thursday morning after Micron reports postmarket Wednesday.
- Interest-rate sensitive sectors may move Thursday with PCE and personal spending data due to be released at 8:30 a.m. in New York.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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