NEW YORK (AP) — Wall Street’s record-breaking rally ran out of momentum on Tuesday after the price of gold topped $4,000 per ounce for the first time.
The S&P 500 dipped 0.4% from its latest all-time high and broke a seven-day winning streak. The Dow Jones Industrial Average fell 91 points, or 0.2%, and the Nasdaq composite sank 0.7%.
Stocks took a pause following a nearly relentless rush higher since April on hopes that the economy will remain resilient and that the Federal Reserve will continue to cut interest rates.
Tesla was the heaviest weight on the market and dropped 4.4% after unveiling cheaper versions of two of its electric car models. The stock gave back most of its leap from the prior day, when speculation and hype built after Tesla hinted at a coming product announcement.
Oracle also helped drag the market lower. It fell 2.5% after a news report suggested it’s making thin profit margins on a key line of business related to artificial-intelligence technology.
The frenzy around AI has been one of the biggest trends guiding Wall Street to record after record recently. It’s been so strong that it’s raised worries that prices have potentially shot too high across the market.
On Tuesday, Dell climbed 3.5% after executives talked up the company’s opportunity for growth because of AI at an investment conference. Advanced Micro Devices rallied 3.8% to add to its surge from Monday, when it announced a deal where OpenAI will use its chips to power AI infrastructure. IBM rose 1.5% after announcing a partnership that will integrate Anthropic’s Claude AI chatbot into some of its software products.
Much is riding on expectations that the AI investment boom will pay off by making the global economy more productive and driving more growth. Without that increased efficiency, inflation could push higher due to upward pressure coming from the mountains of debt that the U.S. and other governments worldwide are building.
That has optimists on Wall Street buying tech stocks and pessimists buying gold, according to Thierry Wizman, a strategist at Macquarie Group.
Investors have traditionally seen gold as offering protection from high inflation. Its price has soared more than 50% this year not only because of governments’ huge debt loads but also because of political instability worldwide and expectations for lower interest rates from the Fed.
Investors looking to “hedge” themselves, meanwhile, may be buying both tech stocks and gold, Wizman wrote in a research report.
Elsewhere on Wall Street, Intercontinental Exchange rose 1.8% after the company behind the New York Stock Exchange said it had agreed to invest up to $2 billion in Polymarket.
Polymarket offers prediction markets that allow customers to profit from making predictions on events across politics, financial markets and popular culture, such as who will become New York City’s next mayor or whether the U.S. government will announce this year that aliens exist.
Constellation Brands added 1% after the beer and wine company reported results for the latest quarter that several analysts said were better than they expected. Sales of beer still dropped from a year earlier, though, as CEO Bill Newlands highlighted a “challenging socioeconomic environment that has dampened consumer demand.”
All told, the S&P 500 fell 25.69 points to 6,714.59. The Dow Jones Industrial Average dropped 91.99 to 46,602.98, and the Nasdaq composite sank 153.30 to 22,788.36.
In Toronto, shares of Trilogy Metals more than tripled after the White House said late Monday that it’s taking a 10% equity stake in the Canadian company while allowing the Ambler Road mining project in Alaska to go forward.
President Donald Trump late Monday ordered the approval of a proposed 211-mile road through an Alaska wilderness to allow mining of copper, cobalt, gold and other minerals used in production of cars, electronics and other technologies. Trilogy is seeking to develop the Ambler site along with an Australian partner.
In Europe, France’s CAC 40 edged up by less than 0.1% a day after slumping due to the latest political upheaval in Paris. France’s prime minister abruptly resigned on Monday.
In the bond market, the yield on the 10-year Treasury eased to 4.13% from 4.18% late Monday.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.