Investors eye AI spending returns and Powell’s final meeting outcome this week
US stocks pulled back from record levels Tuesday while futures steadied early evening, as investors weighed renewed concerns about AI growth alongside a critical stretch of earnings and a closely watched Federal Reserve decision.
During the regular session, equities moved lower, led by technology shares. The S&P 500 fell 0.49%, the Nasdaq Composite dropped 0.9% (its sharpest daily percentage decline in a month) and the Dow Jones Industrial Average slipped 25.86 points, or 0.05%
Canada’s benchmark S&P/TSX Composite index closed down about 0.69%, pressured by broad-based declines led by weakness in technology and materials, while energy stocks provided some support amid stronger oil prices; overall market breadth was negative, with more stocks falling than rising, underscoring continued volatility tied to sector pressures and commodity swings.
The selling pressure on Wall Street followed a report that OpenAI missed internal targets for both revenue and weekly users, reviving doubts about whether massive spending on AI infrastructure can deliver expected returns, according to The Wall Street Journal.
"(OpenAI) is giving investors more food for thought, whether the growth is slowing and what that means for capex spending," Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana told Reuters. "You've got major hyperscalers coming out with results tomorrow, which probably gives investors even more reason to take a few chips off the table."
Mag 7 earnings
Those concerns come at a critical moment, with first-quarter earnings season shifting into high gear. Four members of the Magnificent Seven (Alphabet, Amazon, Meta Platforms and Microsoft) are scheduled to report after Wednesday’s close, with Apple set to follow on Thursday. Together, the companies represent roughly 44% of the S&P 500’s total market capitalization.
Investors are particularly focused on whether those firms can justify aggressive AI-related capital spending.
After the closing bell, stock futures were little changed. Contracts tied to the S&P 500 rose 0.1%, Nasdaq 100 futures gained 0.2%, and Dow futures advanced modestly, reflecting a wait-and-see approach ahead of key catalysts, CNBC reported.
Corporate results outside of Big Tech offered a mixed picture. Starbucks shares jumped after raising its full-year outlook, while Robinhood fell following weaker-than-expected quarterly results. Seagate Technology and NXP Semiconductors surged after posting earnings beats and issuing upbeat guidance, according to CNBC.
Geopolitics, oil
Meanwhile, geopolitical tensions and rising oil prices added another layer of uncertainty. Crude has climbed sharply amid an ongoing Middle East conflict, stoking inflation concerns and contributing to a broader risk-off tone, Reuters reported.
The energy spike is also in focus for policymakers as the Federal Reserve concludes its latest meeting. The central bank is widely expected to leave rates unchanged, but investors are closely watching for signals on how officials interpret persistent inflation risks tied to higher oil prices.
With AI enthusiasm facing renewed scrutiny, oil markets injecting volatility and earnings from the market’s most influential companies just hours away, investors are bracing for a decisive stretch that could shape the trajectory of equities in the weeks ahead.
