United States equity markets closed modestly lower on Tuesday (Wednesday AEST), pulling back from record highs as renewed concerns surrounding the artificial intelligence sector weighed on technology stocks ahead of a pivotal wave of corporate earnings.
The Dow Jones Industrial Average slipped 25.9 points, or 0.1%, to 49,141.9, the S&P 500 fell 35.1 points, or 0.5%, to 7,138.8, and the Nasdaq Composite declined 223.3 points, or 0.9%, to 24,663.8.
Investor sentiment in the technology sector weakened following a report that OpenAI’s revenue growth and user expansion had fallen short of internal expectations. According to the Wall Street Journal, Chief Financial Officer Sarah Friar raised concerns to leadership that the company may struggle to meet its computing contract obligations if revenue growth fails to accelerate.
The report prompted a sell-off across semiconductor and AI-linked stocks. Nvidia declined 1.6%, while Broadcom dropped 4.4%. Advanced Micro Devices fell 3.4%, and Oracle retreated 4.1%.
Market focus is now turning towards the first-quarter earnings season, which intensifies this week. Five of the “Magnificent Seven” megacap technology companies are scheduled to report results, providing critical insight into the health of the AI trade and broader corporate profitability.
On Wednesday (Thursday AEST), Alphabet, Amazon, Meta Platforms and Microsoft are set to release their earnings, followed by Apple on Thursday (Friday AEST). The results are expected to play a key role in determining whether equity markets can sustain their recent momentum.
Tuesday’s declines follow a strong session on Monday, when both the S&P 500 and Nasdaq reached fresh record highs.
However, geopolitical uncertainty continues to act as a headwind, with developments in the Middle East remaining in focus.
Over the weekend, U.S. President Donald Trump cancelled plans to dispatch special envoy Steve Witkoff and Jared Kushner to Pakistan for ceasefire discussions related to Iran.
Despite the setback, there were tentative signs of progress. White House press secretary Karoline Leavitt confirmed on Monday that Trump and his national security team had reviewed Iran’s proposal to reopen the Strait of Hormuz, contingent on an end to hostilities and the lifting of the U.S. blockade.
In corporate developments, General Motors rose 1.3% after the automaker exceeded quarterly profit expectations and raised its full-year earnings guidance, supported by resilient demand in the U.S. vehicle market and the prospect of tariff refunds.
Conversely, United Parcel Service fell 4.0% after reaffirming its full-year revenue outlook, as higher fuel costs offset underlying improvements in its core operations.
Coca-Cola gained 3.9% after delivering better-than-expected quarterly results. The beverage group downplayed the impact of elevated oil prices and upgraded its annual earnings forecast.
On the bond markets, Treasury yields moved higher. The 10-year yield rose 0.2% to 4.35%, while the 2-year yield climbed 1.1% to 3.842%.
