Why the Dow Just Fell More Than 950 Points

Another sell-off for artificial-intelligence stocks helped drag the US market sharply lower Wednesday, as Wall Street's former superstars continue to face heavy scrutiny for their success.

• The S&P 500 fell 119.66 points, or 1.6%, to 7,266.99 after giving up a brief modest gain in the morning. The index had its first back-to-back drop in three weeks.
• The Dow Jones Industrial Average fell 953.33 points, or 1.9%, to 49,918.78.
• The Nasdaq composite fell 509.32 points, or 2%, to 25,169.50.

Wall Street has been shaky since last week, when AI stocks went from roaring to records to suddenly turning lower, the AP reports. Among the worries is that their prices have simply shot too high, too fast because of AI mania. The question now is whether the break lower has cleared out excessive optimism that may have built into their stock prices, or if it's the start of a longer downturn.

Super Micro Computer, which sells AI servers, tumbled 28% after saying late Tuesday that it plans to raise $7 billion in cash by selling shares of stock and convertible preferred stock. Such moves raise the most money for companies when their stock prices are high, and they can dilute the ownership stakes of existing shareholders. Micron Technology swung from an early loss of nearly 4% to a modest gain and back to a loss of 4.7%. It's coming off a wild stretch where it sank 7.7% last Thursday, then plunged another 13.3% Friday and rallied 9.9% Monday. Despite all the swings, the computer memory maker's stock is still up 212.5% for the year so far.

• Nvidia, the chip company that's grown into a nearly $4.9 trillion behemoth because of the AI boom, was the heaviest weight on the S&P 500 after falling 3.7%. The second-heaviest was another AI winner, Broadcom, which fell 5.1%.

Weakening stocks for companies with big fuel bills also pulled the market lower. United Airlines sank 6.2%, and cruise-operator Carnival fell 6.3% after oil prices rose due to the latest fighting in the war with Iran. The price for a barrel of Brent crude oil rose 1.8% to $93.10 after President Trump warned that Iran would "pay the price" for stalled negotiations.

High oil prices have sent inflation higher, and a report on Wednesday showed that prices for US consumers jumped in May at the highest speed in three years. But Treasury yields nonetheless held relatively steady in the bond market because the figures were pretty much exactly what economists had forecast. Traders have been building bets recently that the Fed will have to hike its main interest rate at least once this year, given how high inflation is and how strong the US job market remains.