AI-led selloff drags Wall Street indices down

Wall Street ended Wednesday in the red, with artificial intelligence and chip stocks bearing the heaviest losses. The Nasdaq Composite suffered its steepest drop since July 23, while the Nasdaq 100 and the S&P 500 saw their biggest slides since July 29.

The consumer price index reading, which came in above expectations, set an uneasy tone. Annual headline inflation stood at 3.7%, beating the forecast of 3.6%, renewing attention on price pressures and the Federal Reserve's policy direction. Treasury yields jumped after the data, weighing on growth-stock valuations, before pulling back from their peaks as equities slumped and a flight to safety emerged. The two-year yield ended 1.9 basis points higher at 4.812%, while the 10-year note moved 1.9 basis points lower to 5.198%. During the session, the two-year yield peaked at 4.95% and the 10-year yield reached 5.329%.

The Dow Jones Industrial Average fared comparatively better, slipping only 0.09%. But the decline was not confined to tech shares; the Russell 2000 dropped nearly 2%. Market participants now await the September producer price index report due Thursday at 8:30 a.m. Eastern. Together, the CPI and PPI figures should provide a clearer picture of the core personal consumption expenditures data for traders and Fed policymakers.

Closing figures for the major indexes:

• Dow Jones Industrial Average: fell 48.98 points, or 0.09%, to 51,626.17.

• S&P 500: fell 86.51 points, or 1.11%, to 7,718.94.

• Nasdaq Composite: fell 511.51 points, or 1.88%, to 26,692.87.

• Russell 2000: fell 53.84 points, or 1.93%, to 2,729.53.

• Nasdaq 100: fell 618.66 points, or 2.02%, to 29,950.82.

AI and semiconductor names bore the worst of the selling. There was little shelter among AI, chip, and related infrastructure stocks. Several shares dropped over 5%, and some posted losses in the double digits.

The steepest declines included:

• CoreWeave: down 15.46%.

• Nebius: down 10.08%.

• Credo Technology: down 9.62%.

• Lumentum: down 9.28%.

• Coherent: down 9.19%.

• Bloom Energy: down 9.15%.

• Marvell Technology: down 8.72%.

• Astera Labs: down 7.72%.

• Arm Holdings: down 6.81%.

• GE Vernova: down 6.20%.

• SK Hynix: down 6.06%.

• Monolithic Power Systems: down 5.79%.

• AMD: down 5.73%.

• SanDisk: down 5.33%.

Even among the relative outperformers, losses were notable: Texas Instruments shed 2.50%, KLA dropped 2.82%, and Broadcom gave up 3.10%. The breadth of the decline underscores the selling intensity. When losing 2.5% to 3% counts as a relatively strong performance, it is clear that sellers dominate.

Apple was the only member of the Magnificent Seven to end in positive territory.

• Apple: up 0.50%.

• Alphabet: down 1.74%.

• Amazon: down 1.74%.

• Microsoft: down 1.80%.

• Tesla: down 2.15%.

• Nvidia: down 3.16%.

• Meta: down 3.27%.

Nasdaq 100: sellers strengthen grip below the 200-hour moving average. The index settled at 29,950.82, beneath its 200-hour moving average of approximately 30,145. That breach tilts the near-term technical outlook more decisively in favor of sellers. Buyers now face the task of pushing the index back above that level and holding it. Until they succeed, any bounce is likely to be sold into by traders defending that area. To the downside, the 100-day moving average around 29,618.83 is the next key level. The upward-sloping lower channel trendline lies close by, marking that zone as a critical fight. Should buyers protect that region, they may attempt to halt the slide. A decisive move below both the moving average and the trendline would strengthen the bearish case, turning the swing zone of 28,822.67–28,953.26 into a wider downside target. On the other hand, recapturing 30,145 would relieve some near-term pressure. From there, buyers would need to grind through the resistance band between 30,634.67 and 30,762.20, which encompasses the 100-hour moving average near 30,665. Sellers have taken the initiative. Now buyers must demonstrate they can reclaim lost ground.

Trading principle: let the levels define the risk. A steep drop does not necessarily mean that a stock or index is undervalued. For novice traders, the more practical question is: What would signal that the selling pressure is abating? For the Nasdaq 100, a recovery that reclaims and holds above the breached 200-hour moving average would be a first sign of strength. The appearance of buyers around the 100-day moving average would be another event to monitor. Support levels offer traders a reference point for measuring risk. But the price must still hold those levels.