The Nasdaq and S&P 500 slipped on Wednesday as investors sold off tech stocks and shifted into lower-valued sectors. Market participants were also waiting for signals from Federal Reserve officials at the Jackson Hole symposium later this week.
Technology shares, which had powered much of the rebound from April’s Wall Street selloff, continued to retreat. The S&P 500 technology index ended lower, while sectors such as energy, healthcare, and consumer staples advanced.
“All signs point to a rotation rather than a true selloff,” said Bryant van Cronkhite, senior portfolio manager at Allspring. He added that tech valuations look stretched, while many overlooked areas of the market appear more attractive.
According to preliminary figures, the S&P 500 fell 16.40 points (0.26%) to 6,394.97, and the Nasdaq Composite dropped 144.76 points (0.68%) to 21,170.19. The Dow Jones Industrial Average was nearly flat, gaining 1.48 points to close at 44,923.75.
Several factors weighed on tech shares. Last week, OpenAI CEO Sam Altman warned that AI stocks may be in a bubble, while an MIT study highlighted that many tech firms are struggling to turn AI investment into profits.
Political risk also pressured the sector. The Trump administration is reviewing potential equity stakes in U.S. chipmakers like Intel, following recent revenue-sharing agreements with Nvidia and AMD. Shares of Nvidia, AMD, Intel, and Micron all declined. Investors now look to Nvidia’s August 27 earnings for insights into AI-driven demand.
Other megacap growth stocks, including Apple and Meta, also lost ground.
Minutes from the Fed’s July meeting showed most policymakers favored keeping rates steady at 4.25%–4.50%, despite two dissenters. Markets now await Fed Chair Jerome Powell’s speech in Jackson Hole on Friday for guidance. Traders are pricing in a possible 25 basis point rate cut in September, according to LSEG data.
Meanwhile, investors also noted President Donald Trump’s call for Fed Governor Lisa Cook to resign over alleged mortgage fraud, adding further tension to Fed politics.
Retail earnings remained in focus, seen as a gauge of U.S. consumer strength. Target shares fell after the company appointed a new CEO while maintaining a cautious annual forecast. Estee Lauder also dropped after warning that tariff pressures would hurt profits.
