AI Sparks Upheaval on Wall Street: Tech Rout & Mixed Markets

Wall Street indexes experienced a mixed day of trading on Monday, following a tumultuous week highlighted by an AI-triggered tech rout. Investors closely monitored crucial economic data, seeking insights into the Federal Reserve's future interest-rate trajectory. As of 10:01 a.m. ET, the Dow Jones Industrial Average fell 168.67 points, or 0.34%, to 49,947.00, while the S&P 500 dipped by 2.63 points, or 0.04%, to 6,929.67. Conversely, the Nasdaq Composite rose 17.84 points, or 0.08%, to 23,049.06.

Consumer discretionary stocks led the decline, dropping 1.3%, while tech stocks edged up 0.7%. The S&P 500 and the Nasdaq recovered on Friday, following three consecutive sessions of losses driven by technology share sell-offs, and for the first time, the Dow closed above the significant 50,000-point milestone.

Software companies bore the brunt of last week's turbulence, affected by concerns over AI intensifying competition and the strain on margins. Large-cap tech companies faced investor apprehension due to ambitious capital expenditure plans, with Amazon, Alphabet, Meta, and Microsoft collectively poised to spend around $650 billion to excel in AI. Market strategist Art Hogan noted the dichotomy in investor sentiment relating to funding these expenditures, emphasizing the importance of free cash flow over debt dependence.