Wall Street falls sharply as AI stocks resume their sell-off

Artificial-intelligence stocks are resuming their sell-off on Tuesday, and the former superstars that had led the market to records are dragging Wall Street down with them.

The S&P 500 dropped 1.5% after erasing an early gain of 1% and pulled further from its all-time high set a week ago. The Dow Jones Industrial Average was down 294 points, or 0.6%, as of 12:15 p.m. Eastern time, and the Nasdaq composite was 2.5% lower.

Indexes swung lower as companies selling computer chips, memory and other building blocks of the AI boom broke from early gains to losses. Micron Technology went from a jump of 4.2% to a drop of 7.5%, for example. That’s a day after it soared 9.9% and two days after it plunged 13.3%.

The computer memory company’s stock has already tripled so far this year, raising criticism that it’s gone too far, too fast. Following last week’s industrywide sell-off, the question is whether AI stocks broadly are heading for a long downturn or just needed a shake-out to get rid of excessive optimism.

Marvell Technology dropped 13.3%, and Advanced Micro Devices sank 8.1% after both AI winners also erased early-morning gains. Nvidia’s fall of 3.4% was the single heaviest weight on the S&P 500 because the chip company is Wall Street’s largest company by value and thus its most influential.

The weakness for AI stocks drowned out the benefit Wall Street got from easing oil prices. More stocks in the S&P 500 actually rose than fell, despite the sharp drop for the overall index, as the price for a barrel of Brent crude oil sank 4.4% to $90.13. It had briefly topped $98 the day before.

Oil prices have swung up and down as hopes fade and rise that the United States and Iran can reach a deal to reopen the Strait of Hormuz. A reopening would allow oil tankers to resume delivering crude from the Persian Gulf to customers worldwide.

The drop in oil prices helped stocks of airlines, which have been punished by soaring fuel costs. U.S. airlines spent more than $6 billion on jet fuel in April, up 78% from a year earlier, according to government data. American Airlines climbed 1.4%, and Delta Air Lines added 1%.