Stocks saw a modest rise on Wednesday, but initial enthusiasm quickly diminished amid a continued sell-off in artificial intelligence (AI) stocks and growing concerns about a potential government shutdown. Additionally, some end-of-quarter profit-taking exerted pressure on the three main indexes.
By the market’s close, the blue-chip Dow Jones Industrial Average had fallen 0.4% to 46,121, while the broader S&P 500 was down 0.3%, settling at 6,637. The tech-heavy Nasdaq Composite mirrored this trend, also dropping 0.3% to 22,497. Despite these losses, all three indexes remained on track to finish the quarter and the month with substantial gains.
Among the S&P 500 sectors, materials emerged as the weakest performer, primarily burdened by a significant 17% decline in Freeport-McMoRan (FCX). The company revised its third-quarter sales guidance downward due to halted operations at its Grasberg Block Cave mine in Indonesia following a fatal mud rush incident earlier this month.
The technology sector closed in the red, with notable declines in major AI stocks like Nvidia (NVDA), which dropped 0.8%, and Oracle (ORCL), which fell 1.7%—marking a second consecutive day of losses for both companies. Micron Technology (MU) also faced a decline following its earnings announcement. While Micron reported higher-than-expected earnings and revenue for its fiscal fourth quarter, and provided positive guidance for the upcoming first quarter, its stock still decreased by 2.8%. Analysts suggest this slip reflects a “sell-the-news” reaction, especially after the stock surged nearly 40% earlier in the month.
Not all companies experienced a downturn; U.S.-listed shares of Alibaba Group Holding (BABA) soared 8.2% following news of the company’s commitment to significantly increase its AI spending. During Alibaba Cloud’s annual technology conference, CEO Eddie Wu revealed plans to launch a major three-year initiative involving an investment of 380 billion yuan in AI infrastructure. Jefferies analyst Thomas Chong maintained a Buy rating on BABA, citing multiple growth drivers and the company’s leading position in cloud computing as indicators of future success.
In another notable market move, Lithium Americas (LAC) saw its shares skyrocket by nearly 96% after reports emerged that the Trump administration might consider acquiring a 10% equity stake in the company. This comes as Lithium Americas renegotiates a substantial $2.26 billion loan from the Department of Energy for its Thacker Pass mine, a joint venture with General Motors (GM), located in northern Nevada. The mine is anticipated to become a major lithium source for electric vehicles and other technologies.
On the economic front, new home sales surged 20.5% from July to August, reaching a seasonally adjusted annual rate of 800,000—its highest level in three years, as reported by the Census Bureau. Analysts attributed this spike to slight decreases in mortgage rates and increased buyer incentives from homebuilders, although they cautioned that new home sales data often undergoes significant revisions.
Looking ahead, market participants are bracing for an eventful week, with several Federal Reserve speakers slated to address the public, the second reading for Q2 gross domestic product (GDP) set to be released, and the focus shifting to the Personal Consumption Expenditures (PCE) Price Index data for August.
