U.S. stocks closed lower on Wednesday, extending recent losses as sharp declines in Oracle and Nvidia weighed heavily on investor confidence in the artificial intelligence trade.
By the close of trading at 4:00 p.m. ET, the Dow Jones Industrial Average fell 228 points, or 0.5%. The S&P 500 dropped 1.2%, while the technology-focused Nasdaq Composite slid 1.8%.
Oracle slide pressures AI stocks
Shares of Oracle fell more than 5% after reports revealed that Blue Owl Capital will not support the company’s planned $10 billion AI data center project in Michigan, which was expected to serve OpenAI.
Blue Owl had been in discussions with lenders and Oracle regarding a potential investment in the 1-gigawatt facility located in Saline Township. However, negotiations ultimately failed to move forward.
Oracle has become a focal point for concerns surrounding the cost and sustainability of large-scale AI data center investments. Investors remain cautious about the capital intensity of these projects, questions around long-term returns and the interconnected nature of many AI infrastructure deals.
Over the past three months, Oracle shares have declined more than 41%, although the stock is still up 14% so far this year.
The negative sentiment spilled over into the broader AI sector, with Broadcom and Nvidia also posting notable losses and dragging the technology sector lower.
Waller says Fed still has room to cut rates
Federal Reserve Governor Christopher Waller said on Wednesday that the central bank still has flexibility to lower interest rates, citing growing signs of weakness in the labor market.
Speaking at the Yale School of Management CEO Summit in New York, Waller said the Fed’s policy rate may be roughly 50 to 100 basis points above the neutral level, suggesting there is room for further easing.
He added that while there is no urgency to rush rate cuts, policymakers can gradually guide borrowing costs lower as inflation continues to moderate.
The comments come after the Federal Reserve reduced interest rates by 25 basis points last week, a move aimed at supporting a weakening jobs market despite lingering inflation pressures.
Recent economic data has reinforced concerns about labor market softness. While nonfarm payrolls increased more than expected in November, the unemployment rate rose to a four-year high. Job gains were also significantly smaller compared with the sharp declines recorded in previous months.
Additional indicators pointed to cooling economic momentum. December purchasing managers’ index data showed weaker-than-expected growth in both manufacturing and services, while delayed October retail sales figures indicated slowing consumer spending.
Waller’s remarks drew added attention following a Wall Street Journal report that President Donald Trump is expected to interview him as part of the process to select the next Federal Reserve Chair. Trump has previously said former Fed Governor Kevin Warsh and White House economic adviser Kevin Hassett are leading candidates to replace Jerome Powell, whose term ends in May.
Although Waller was appointed to the Fed’s board by Trump, reports suggest he is viewed as a longer-shot candidate due to less personal proximity to the president compared with Warsh or Hassett.
Investors are now awaiting the release of the November consumer price index on Thursday.
Micron earnings and media deal drama
Attention later in the session turned to corporate developments. Chipmaker Micron Technology is set to report earnings after the closing bell, with analysts expressing strong optimism about a potential multi-year growth cycle driven by demand for high-bandwidth memory used in advanced AI processors.
Elsewhere, shares of homebuilder Lennar declined after the company reported fourth-quarter earnings that fell short of expectations, as high costs continue to weigh on housing demand.
In the media sector, Warner Bros. Discovery’s board rejected a $108.4 billion hostile takeover bid from Paramount Skydance, citing concerns over financing commitments.
The decision to recommit to Netflix’s buyout proposal marked another twist in the battle for Warner Bros.’ film and television assets, including its extensive content library.
