S&P500 and Nasdaq 100: Powell Says US Stocks Are Overvalued, Tech Sector Slides

Is the AI Trade Losing Steam with Nvidia, Oracle, and Microsoft Under Pressure?

Nvidia fell 3% as traders reassessed the implications of its $100 billion AI infrastructure collaboration with OpenAI. Though the announcement initially pushed the stock higher, comparisons to dot-com-era optimism have raised red flags. Questions also linger over whether current energy capacity can sustain such aggressive AI growth targets.

Oracle, which surged over 50% in three months on AI optimism, lost 4%, while Microsoft also dragged on the tech sector.

What Did Powell Say About Equity Valuations and Rates?

Fed Chair Jerome Powell told lawmakers that “equity prices are fairly highly valued,” reinforcing concerns that stocks may have run too far, too fast. He reiterated that the path forward for interest rates remains uncertain and described the situation as “challenging.” His remarks weighed on sentiment and cooled expectations for aggressive rate cuts.

How Did Broader Indexes and Sectors React?

Despite tech weakness, the Russell 2000 outperformed, briefly hitting a record high on the back of last week’s rate-cut-fueled optimism. Energy led sector gains, jumping 1.82%, supported by strength in oil services names like Halliburton (+6.8%) and Baker Hughes (+3.4%). Defensive sectors like consumer staples and utilities also eked out modest gains. Technology was the biggest laggard, down 1.3%.

Top decliners included Generac (-7.7%), Regeneron (-4.8%), and Oracle (-4.6%). On the upside, Paramount Skydance (+7.9%) and McKesson (+6.5%) were among the session’s top performers.

What Are Traders Watching Next—Inflation or Washington Gridlock?

Market attention now shifts to Friday’s PCE inflation report, the Fed’s preferred price gauge. A softer read could reinforce bets on cuts, while a strong print may further delay policy easing.