Sinking AI stocks pull Wall Street further from its record

Wall Street has moved ever further from its record high as AI-related stocks continue their downward trend. The S&P 500, Dow Jones Industrial Average, and Nasdaq composite all experienced declines on Tuesday. AI stocks, which have been major winners this summer, are pulling the market down due to concerns about their inflated prices and potential for overvaluation.

Micron Technology, a key player in memory and computer memory, saw a 7 percent drop, while Nvidia and Broadcom both declined by 2.4 and 2.9 percent, respectively. Despite these recent fluctuations, these stocks remain strong performers, with Micron having more than tripled its value this year. High interest rates are putting pressure on these stocks, as investors become wary of paying high prices for expensive investments.

High oil prices, driven by uncertainty surrounding the Iran conflict, have led to a rise in bond yields. This, in turn, has made stocks less attractive to investors. High rates have also impacted the housing market, as homebuilders reported lower-than-expected new home construction. High yields may also slow down the growth of Big Tech companies, which rely on borrowing to fund data centers.

Meanwhile, other tech companies are facing scrutiny, with Klarna falling 21 percent despite strong quarterly results, and Meta Platforms dropping 2.8 percent before a major trial over social media harms to children. Abroad, European and Asian stock indexes were mixed, with South Korea's Kospi index falling 1.5 percent.