Wall Street: S&P 500, Nasdaq drop on concerns over artificial intelligence boom

The S&P 500 and Nasdaq fell on Tuesday as anxieties regarding the artificial intelligence surge intensified.

Technology equities declined following a Wall Street Journal report indicating that industry leader OpenAI fell short of internal projections for weekly active users and revenue. This fueled doubts about the ChatGPT creator's capacity to sustain its enormous capital expenditures on data centers.

At 09:59 a.m. ET, the Dow Jones Industrial Average rose 57.59 points, or 0.12%, to 49,225.38, the S&P 500 lost 33.41 points, or 0.47%, to 7,140.50 and the Nasdaq Composite lost 196.43 points, or 0.79%, to 24,690.67.

At the open, the Dow Jones Industrial Average rose 109.0 points, or 0.22%, to 49,276.8. The S&P 500 fell 40.2 points, or 0.56%, to 7,133.74​, while the Nasdaq Composite dropped 277.5 points, or 1.12%, to 24,609.574.

Oil prices surged on Tuesday, surpassing $110 per barrel, as efforts to reopen the strategic Strait of Hormuz remained stalled. The White House declined to clarify whether President Donald Trump intends to consider Iran's recent proposals aimed at resolving the sixty-day conflict and restoring access to the vital shipping lane, which would supposedly delay discussions regarding Tehran's nuclear ambitions.

Concurrently, Qatar warned of a potential "frozen conflict" within the Gulf region on Tuesday, as diplomatic negotiations between the United States and Iran appeared to reach a stalemate.

Brent crude futures for June rose 2.8% to $111.26 per barrel, while the American benchmark, WTI for June delivery, increased 3.4% to $99.62 per barrel. Expectations for a resolution had improved heading into the weekend; however, Trump neutralized that momentum on Saturday by canceling a scheduled diplomatic mission to Islamabad by envoys Steve Witkoff and Jared Kushner.

"Right now, the market is not optimistic about the chance of a deal to reopen the Strait due to Iran's request to push discussions about nuclear disarmament into the future," said Kathleen Brooks, research director at XTB trading platform.

Key Stock Movers

Chip stocks tumbled, with Nvidia, AMD and Arm Holdings falling 2.4%, 3.5% and 6.3%, respectively.

Oracle shares fell 2.9%.

Nvidia-backed CoreWeave’s stock slid 2%.

General Motors stock slipped 3% despite the automaker lifted its full-year earnings forecast on a resilient US car market and an expected tariff refund.

Coca-Cola shares climbed 5.5% after the beverage giant lifted its annual adjusted profit forecast.

Bullion

Gold values pulled back on Tuesday, as worries regarding inflation stayed elevated following Trump’s apparent lack of interest in Iran’s recent plan to conclude the hostilities.

As of 9:45 a.m. EDT (1345 GMT), spot gold dropped 2.1% to $4,585.21 per ounce. US gold futures for June delivery fell 2% to $4,598.40.

"It's revived pessimism about the peace process in the Middle East. The Trump administration rejected Iran's most recent offer and so the strait remains closed. That has driven oil prices up and revived concerns about inflation heading into the FOMC meeting this week. So that's pushed gold to four-week lows," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Among other metals, spot silver fell 3.3% to $72.99 per ounce, platinum lost 1.9% to $1,956.69 and palladium was down 0.9% at $1,463.39.