AI Growth Concerns and Geopolitical Tensions Drag US Equities Lower

The Nasdaq Composite fell 1.2%, dropping 302.30 points to 24,584.80, as investors reacted to reports that OpenAI has failed to meet internal revenue and user growth targets. The S&P 500 followed suit, declining 0.7% to 7,126.61, while the Dow Jones Industrial Average remained relatively flat, edging up 15.33 points to 49,183.12. The downturn was centered on the AI trade. Reports indicating OpenAI's struggle to hit key benchmarks raised doubts about the sustainability of massive capital expenditures on data centers. This sentiment hit partners and suppliers hardest, with Oracle shares tumbling 4% and chipmakers including Nvidia, AMD, and Broadcom seeing notable declines. The Philadelphia Semiconductor Index plunged 4.7%. Beyond technology, Wall Street is pricing in continued instability in the Middle East. The Trump administration has reportedly signaled it will not accept Iran's proposal to reopen the Strait of Hormuz and end hostilities, keeping geopolitical risk premiums elevated. In contrast, Coca-Cola provided a bright spot for the Dow, surging 6.2% after beating first-quarter expectations and raising its full-year guidance. However, this was not enough to lift the broader market, as gold stocks also slumped 5% following a drop in precious metal prices. The weakness extended globally, with the Nikkei 225 and Hang Seng both dropping 1%. In the fixed-income market, the benchmark 10-year Treasury yield rose 3.5 basis points to 4.371%.