NEW YORK (AP) 鈥� And back down goes Wall Street. U.S. stocks are Thursday, led by the market鈥檚 AI superstars that are now feeling the painful downside of big expectations.
The S&P 500 was down 1.5% in early trading, erasing its day that helped it claw back some of its sharp drop over recent weeks. The Dow Jones Industrial Average was down 507 points, or 1.2%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.9% lower.
Semiconductor companies and their suppliers were particularly heavy weights on the market, after soaring to staggering heights in recent years because of the frenzy around .
Marvell Technology lost a fifth of its value and dropped 20.1% even though it reported results for the latest quarter that edged past analysts鈥� forecasts. It also said it expects revenue growth in the current quarter of more than 60% from the prior year, give or take a bit.
But that wasn鈥檛 enough for investors, who have grown used to AI-related companies trouncing expectations.
The poster child of the AI boom, , slid 3.8%.
Such companies had been dominating Wall Street for years, helping it to run to record after record. But those soaring performances, including a nearly 820% surge for Nvidia from 2023 into 2024, had critics saying their prices had grown too expensive. They鈥檙e also as Chinese companies develop their own AI offerings, with DeepSeek famously saying it didn鈥檛 need to use Nvidia鈥檚 most expensive chips.
The recent stumbles for AI winners are hitting the market when worries are already rising about a weaker-than-expected U.S. economy and about President Donald Trump鈥檚 tariffs.
Trump gave for U.S. automakers on his stiff new tariffs for Mexican and Canadian imports That resuscitated hopes on Wall Street that Trump is using tariffs as just a tool for negotiations and that he may ultimately avoid a worst-case trade war that grinds down economies and sends inflation higher.
But Trump is still pressing ahead with other tariffs scheduled to take effect April 2, and most of his tariffs on China, Mexico and Canada remain in place.
鈥淢uch will depend on whether these new tariffs prove temporary or are toned down,鈥� according to strategists at BNP Paribas. 鈥淏ut even if they are ultimately removed, we anticipate lasting damage to global economic activity.鈥�
U.S. households are already bracing for higher inflation because of the tariffs, while U.S. businesses say they鈥檙e confronting 鈥渃haos鈥� amid all the uncertainty coming out of Washington. Such reports have raised the possibility of a worst-case scenario known as 鈥渟tagflation.鈥� It鈥檚 something that doesn鈥檛 happen often, where the economy is stagnating and is high, and policy makers at the Federal Reserve don鈥檛 have a good tool to fix it.
That has a lot of attention on a report coming Friday from the U.S. Labor Department, which will show how many workers U.S. employers hired last month. A solid job market, which has allowed for solid spending by U.S. households, has been the linchpin preventing a recession.
Retailers, though, have been offering warning signals recently about how much U.S. consumers can keep spending.
Macy鈥檚 on Thursday reported slightly weaker revenue for the end of 2024 than analysts expected, though its profit topped expectations. It also gave a forecast for profit in 2025 that fell short of analysts鈥�, and its stock fell 3.1%.
It was a similar story for Victoria鈥檚 Secret, which beat Wall Street鈥檚 fourth-quarter sales and profit forecasts but also issued tepid sales guidance for the first quarter and full year. Its shares tumbled 12.2%.
In stock markets abroad, indexes were mixed in Europe after the , as was widely expected.
German stocks rose as the market continues to feel reverberations from an agreement by the two parties that will form the country鈥檚 next government to . That is a and opens the way for a trillion or more in new borrowing and spending over the next decade.
Stocks also rose in Asia, including jumps of 3.3% in Hong Kong and 1.2% in Shanghai.
China鈥檚 commerce minister said Thursday that his country and that its economy can weather imposed by Trump, though he added that there are 鈥渘o winners in a trade war.鈥�
In the bond market, U.S. Treasury yields were mixed, and the 10-year Treasury yields was holding relatively steady at 4.28%.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Choe, The Associated Press
