NEW YORK, Sept. 23 (Xinhua) — U.S. stocks retreated on Tuesday after Federal Reserve Chair Jerome Powell said that equity prices appear “fairly highly valued.”
The Dow Jones Industrial Average fell 88.76 points, or 0.19 percent, to 46,292.78. The S&P 500 lost 36.83 points, or 0.55 percent, to 6,656.92. The Nasdaq Composite Index shed 215.50 points, or 0.95 percent, to 22,573.47, snapping a record-setting streak.
Six of the 11 primary S&P 500 sectors ended higher, with energy and real estate leading gains, up 1.71 percent and 0.81 percent, respectively. Consumer discretionary and technology led the laggards, falling 1.44 percent and 1.14 percent, respectively.
Speaking in Providence, Rhode Island, Powell said the Fed considers overall financial conditions when setting policy and acknowledged that “by many measures, for example, equity prices are fairly highly valued.”
Stocks took a turn lower after Powell’s comments. Nvidia dropped 2.82 percent as some investors questioned the structure of the planned 100-billion-U.S.-dollar investment in OpenAI, likening it to speculative behavior during the dot-com era. Oracle fell more than 4 percent, ranking among the worst performers in the S&P 500.
“While the initial reaction to Nvidia’s investment in OpenAI was positive, investors quickly realized that Nvidia may be OpenAI’s only option to get the capital it needs right now, an investor of last resort,” said Gil Luria, head of technology research at D.A. Davidson. “OpenAI has overextended itself by making commitments well beyond its means, and Nvidia may have been the only equity investor willing to help.”
On the economic front, U.S. business activity slowed for a second straight month in September. S&P Global’s flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, slipped to 53.6 this month from 54.6 in August. A reading above 50 indicates expansion in the private sector.
“The survey data are nevertheless still indicative of consumer inflation remaining above the central bank’s 2 percent target in the coming months,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Powell also signaled Tuesday that the rate-cutting path wasn’t clear and that it was a “challenging situation.” Investors are now awaiting Friday’s release of the latest reading of the personal consumption expenditures price index, which is the Fed’s preferred inflation measure.
