U.S. stocks weakened today due to a sell-off in technology stocks, particularly chip manufacturers. Investors are questioning companies’ high debt-financed spending on artificial intelligence while anticipating further increases in U.S. interest rates.
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Technology sector dragged major indices down
The Dow Jones index fell 45.87 points, or 0.1 percent, to 51,666.84 points. The broader S&P 500 index lost 107.33 points, or 1.4 percent, to 7,365.46 points. The technology-focused Nasdaq weakened by 579.56 points, or 2.2 percent, to 25,587.04 points.
Technology companies Nvidia and Alphabet as well as chip manufacturers Intel, Marvell Technology, Advanced Micro Devices, Micron Technology and SanDisk posted losses. According to Globalt analyst Thomas Martin, some reports about artificial intelligence raise questions about the extent of capital expenditures, investments and capacity expansion for semiconductors. SpaceX shares, on the other hand, strengthened after declining in the previous three sessions following their stellar debut on June 12.
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Dollar benefited from higher rate expectations
Six of the 11 major sectors in the S&P 500 index posted gains. Stocks of consumer staples companies strengthened the most, as investors shifted some capital from expensive technology stocks to other sectors. Some software companies also performed well, such as ServiceNow.
The U.S. dollar strengthened today and reached its highest level against a basket of currencies in 13 months. The dollar index rose 0.4 percent to 101.4 points, the euro weakened 0.4 percent against the dollar to 1.1378 USD. The dollar-yen exchange rate remained almost unchanged at 161.58 JPY, while the euro fell 0.4 percent against the yen to 183.85 JPY.
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Source: ČTK
