Tech Stocks Tumble as Market Awaits Federal Reserve Updates

Wall Street's main indexes witnessed a decline on Wednesday, with the Nasdaq hitting a two-week low. This downturn was primarily due to a cooling rally in tech stocks, coupled with investor caution ahead of the Federal Reserve's Jackson Hole symposium later in the week. Following April's market selloff recovery, tech stocks are now retreating as investors reevaluate the sector's high valuations. The S&P 500 technology index dropped by 1.4% during the trading day.

Analysts highlighted several potential reasons for the decline. OpenAI CEO Sam Altman previously stated that AI stocks were 'in a bubble', while a Massachusetts Institute of Technology study revealed that most tech companies are struggling to scale effectively. Further concerns arise from potential government interference, with sources noting the Trump administration's investigation into taking equity stakes in chip firms like Intel, following recent revenue-sharing agreements with Nvidia and AMD.

Nvidia experienced a 1.7% slide, AMD fell by 2.2%, and both Intel and Micron saw drops ranging from 6.8% to 5.1%. Investors are eagerly anticipating Nvidia's quarterly results on August 27 for insights into AI demand. Other significant growth companies, including Apple and Meta, faced pressure as well, declining by 1.7% and 1.4% respectively. Ladenburg Thalmann Asset Management CEO Phil Blancato suggested that the situation involves profit-taking and temporary rebalancing, with potential reversal contingent on forthcoming Federal Reserve decisions.

(With inputs from agencies.)