Stock Market Midday, Oct. 15: Markets Mixed as AI Sell-Off Continues
As of 11:38 AM ET, the Dow Jones Industrial Average (DJINDICES:^DJI) is up 0.98% to 52,126 as it shrugs off inflation data, while the S&P 500 (SNPINDEX:^GSPC) is up 0.10% to 7,727 and the Nasdaq Composite (NASDAQINDEX:^IXIC) is down 0.36% to 26,600 on tech weakness.
Gold is up 1.18% to $4,154.09, and the 10-Year Treasury yield is trading at 5.10% after dropping 1 basis point. Healthcare stocks are the top sector performers this morning, while energy and technology stocks are falling.
Today's biggest moves
Vertiv Holdings shares are down around 6% after two analysts cut their price targets for the stock. CoreWeave fell further as concerns over capital costs continue to weigh on chip stocks. That fear has spread to industrial stocks like Caterpillar, which slid as investors unwound the data-center power premium. PNC Financial Services Group wobbled after its Q3 revenue missed estimates, and Abercrombie & Fitchjust hit a 52-week high.
What this means for investors
Index performance was mixed this morning as the chip sell-off drove a rotation into safer assets, boosting the Dow. Stocks fell yesterday after Core Price Index data revived Fed rate hike concerns. Today's Producer Price Index was also hotter-than-expected, with wholesale prices rising 6.3% year-on-year.
However, the big story today is artificial intelligence (AI) stocks. Semiconductors were already under fire following developments in Chinese chipmaking, and that was before the news that CoreWeave's bond yields had touched 15%. This fueled anxiety about heavy AI debt and spooked the market. Today, Nvidia CEO Jensen Huang attempted to restore confidence, telling Bloomberg that he is optimistic and CoreWeave's cost of capital is decreasing.
Whether or not Huang can reassure investors, this type of volatility is not uncommon, and the rout is a reminder that the AI boom won't last forever. It is a reminder for investors to understand their exposure to AI -- bearing in mind that AI firms make up around 40% of the S&P 500, and that the technology touches many sectors. Think carefully about ways to diversify, as any AI ripples could have a big impact on your portfolio.
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Emma Newbery has positions in Nvidia. The Motley Fool has positions in and recommends Caterpillar, Nvidia, Rocket Lab, Taiwan Semiconductor Manufacturing, and Vertiv. The Motley Fool recommends Abercrombie & Fitch. The Motley Fool has a disclosure policy.
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