Stock Market Today, Dec. 17: AI Concentration Fears Weigh on Markets

S&P 500 fell 1.16% to 6,721.43, the Nasdaq Composite slid 1.81% to 22,693.32 on tech and AI weakness, and the Dow Jones Industrial Average (DJINDEX:^DJI) lost 0.47% to 47,885.96, easing from recent highs.

Market movers

Broadcom dropped nearly 5% as investors reassessed AI-chip valuations. Concerns about AI put pressure on Nasdaq, in spite of a dramatic IPO from Medline (NASDAQ:MDLN). The newly listed medical supply distributor jumped more than 30% in its Nasdaq debut. Micron Technology (NASDAQ:MU) advanced after upbeat earnings.

What this means for investors

Questions about AI drove risk-off sentiment as the S&P 500 finished in the red for the fourth consecutive day. Data from Barclays (NYSE:BCS) shows just 10 companies account for over 40% of the total market cap and over 30% of earnings. That concentration has some investors concerned about the fragility of the market.

The U.S. Census Bureau's October estimates show stagnating retail sales, which puts pressure on retailers and other consumer-focused sectors. The unexpectedly flat outlook sparked uncertainty. However, the data also shows fragmented consumer behavior as some sectors, such as furniture and home furnishing stores, saw increasing sales.

Finally, Federal Reserve governor Christopher Waller told CNBC that a weaker jobs market is a reason for continued, but careful, rate cuts. Other officials are more cautious.

Emma Newbery has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc and Broadcom. The Motley Fool has a disclosure policy.