The U.S. S&P 500 index was sharply lower on Wednesday for a fourth consecutive day of losses.
SPX 500 – Daily Chart
The SPX500 opened the session higher but fell to 6,735 with support ahead at the 6,540 level if weakness persists.
The U.S. share index was lower on valuation concerns, despite recent earnings coming in close to expectations. The Case-Shiller PE index measures the collective valuation of 500 stocks and recently moved above 40. That was only the second time it has happened, and the first time since the 2000 tech bubble burst.
Dovish comments from Federal Reserve Governor Christopher Waller were supportive of stocks and bonds early. He said the US labour market is “pretty soft,” with close to zero job growth, and that inflation is “pretty well anchored” at 2%. He added that interest rates are still 50-100 basis points above neutral, but there is no rush to lower them.
Weakness in AI infrastructure stocks and chipmakers was the most significant drag on the market, and tech stocks have been the driver of the broader index.
Tech giant Oracle was the main drag on the tech stocks after a report from The Financial Times said Blue Owl Capital wouldn’t back a $10 billion data center that it was planning to build for OpenAI. Oracle shares fell by up to 6% on the news, as traders worry about the company’s debt.
“Rotation pressure out of tech has accelerated, with positioning data showing rising demand for smaller-cap and value stocks,” said Adam Turnquist of LPL Financial.
