US equities opened mixed on Tuesday, with the Nasdaq Composite falling 0.5% as artificial intelligence-related shares resumed their slide, while oil prices climbed on heightened geopolitical tensions. The S&P 500 dipped 0.13%, and the Dow Jones Industrial Average edged up 0.14%.
The pullback follows a modest recovery on Monday, when the S&P 500 gained 0.4% and the Nasdaq advanced more than 1%. Investors had bought technology stocks after last week's selloff, which was driven partly by worries over the debt required to finance AI infrastructure.
AI stocks retreat as debt concerns weigh
Several technology and semiconductor names declined in early trading. CoreWeave and Nebius Group each fell about 4.6%, while Apple slipped 0.3% and Nvidia dropped roughly 1.38%. Micron Technology and SanDisk lost around 2% each, and Seagate Technology, Intel, and Advanced Micro Devices all declined more than 1%. The VanEck Semiconductor ETF fell over 1.4%.
The renewed selling reflects lingering concerns about the sustainability of AI investments, particularly the borrowing costs and financing requirements tied to expanding data center capacity. CoreWeave, which lost more than 25% last week, attempted to recover on Monday after an upgrade from Goldman Sachs, but its early gains faded and the stock closed slightly lower.
Sentiment also weakened after South Korean AI infrastructure company Elice Group fell nearly 30% in its market debut, trading below its initial public offering price. The company raised 201.1 billion won, or approximately $151.12 million, through the offering.
Investors are increasingly questioning whether companies spending heavily on AI can translate that outlay into sustainable earnings and cash flow.
Oil prices climb amid geopolitical risks
Oil prices added another layer of uncertainty for equity markets. Brent crude traded near a five-month high as investors factored in risks from attacks on Saudi infrastructure by Yemen's Iran-aligned Houthis and reports of vessel attacks in the Persian Gulf. Rising energy costs can feed into inflation, potentially complicating the economic outlook and the path of interest rates.
The combination of geopolitical uncertainty and AI financing worries has left investors cautious following last week's technology-led decline. Monday's recovery offered some relief, but the renewed weakness in futures suggests sentiment remains fragile.
Corporate earnings in focus
Investors are closely monitoring quarterly results this week for signs of whether companies can sustain growth amid mounting macroeconomic risks. SpaceX and Netflix are scheduled to report after Tuesday's close, followed by Meta Platforms and Tesla on Wednesday.
Individual corporate updates also influenced trading. Steel Dynamics fell 3.29% after missing third-quarter profit estimates, while General Motors dropped 5.24% after forecasting annual earnings below analysts' expectations. Shares of 3M advanced 3.4% after the company expanded its data-center partnership with Amazon and raised its full-year profit forecast. Qualcomm shares declined around 0.2% after the chipmaker announced plans for global job cuts following its annual employee reviews.
The upcoming earnings reports could help investors assess corporate profitability and the outlook for AI investment as markets navigate renewed pressure on technology stocks and higher oil prices.
This article is for informational purposes only and does not constitute financial advice.
