Stocks fell Thursday as another wave of selling hit the artificial intelligence trade, while healthcare and consumer staples led the S&P 500. Bond yields moved lower even as oil prices rose. Meta dropped nearly 6% after its earnings report.
Stocks moved lower Thursday as another wave of selling washed over the artificial intelligence trade. Money rotated into defensive parts of the market at the same time.
Nvidia, Meta and Lam Research weigh on AI names
Nvidia CEO Jensen Huang told CNBC there is a scarcity of capital for neoclouds like CoreWeave, even though he described compute demand as off the charts. That was likely behind some of the selling. Meta Platforms' comments on its AI funding needs could be another factor.
Lam Research's disappointing guidance for the current quarter is also weighing on semiconductor stocks. Portfolio director Jeff Marks noted that Micron, Intel and Qnity are all lower, and GE Vernova, whose gas turbines are integral to the AI buildout, is down almost 10%.
A day earlier, SpaceX's bullish comments on AI demand and supply constraints had lifted GE Vernova and other data center names. According to Marks, the market has "no memory from one day to the next".
Defensive sectors and bonds attract buyers
Healthcare and consumer staples are the best-performing sectors in the S&P 500. Bond yields are moving lower despite a rise in oil prices, which reflects a flight-to-safety trade.
Johnson & Johnson gained over 2% and has erased all of its post-earnings sell-off. Kimberly-Clark continues to move higher. Procter & Gamble reported a solid quarter Thursday.
Meta falls despite strong revenue growth
Meta is down nearly 6%, even though it reported strong revenue growth Wednesday night and painted an upbeat picture of the opportunity for its Muse AI agent business.
One notable takeaway from the quarter is that Meta is creating a new class of non-voting stock that is likely to be used to help finance its AI buildout. Marks suggested that could be the overhang. With Thursday's decline, Meta has erased most of its post-Muse bounce.
Source: CNBC
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