Worries about AI stocks and interest rates send Wall Street toward one of its worst days since April

NEW YORK (AP) — The U.S. stock market is tumbling Thursday toward one of its worst days since its springtime sell-off, as Nvidia and other AI superstar stocks keep dropping on worries their prices shot too high. Wall Street is also questioning whether the coming cuts to interest rates that it’s been banking on will actually happen.

The S&P 500 sank 1.7% and pulled further from its all-time high set late last month. It’s on track for its worst day in a month and its second-worst since plunging in April after President Donald Trump shocked the world with his “Liberation Day” tariffs.

The Dow Jones Industrial Average lost 672 points, or 1.4%, from its own record set the day before, while the Nasdaq composite was down 2.6%, as of 2:15 p.m. Eastern time.

Nvidia was the heaviest weight on the market after the chip company lost 4.9%. Other AI darlings also struggled, including drops of 8.2% for Super Micro Computer, 7% for Palantir Technologies and 5.6% for Broadcom.

Questions have been rising about how much further stocks caught up in the artificial-intelligence frenzy can go following already spectacular gains. At the start of this month, Palantir was sporting a stunning rise of nearly 174% for the year so far, for example.

Such sensational performances have been one of the top reasons the U.S. market has hit records despite a slowing job market and high inflation. AI stock prices have shot so high, though, that they’re also drawing comparisons to the 2000 dot-com bubble which ultimately burst and dragged the S&P 500 down by nearly half.

In the meantime, most stocks outside of AI fell across Wall Street as traders worry that the Federal Reserve may not deliver another cut to interest rates in December, as they had been assuming.

Wall Street loves cuts to rates because they can goose the economy and prices for investments, even though they can also worsen inflation. A halt in cuts could undercut U.S. stock prices after they already ran to records in part on expectations for more reductions.

Expectations have sunk sharply in recent days that the Fed will cut its main interest rate for a third time this year. Traders now see only a coin flip’s chance of it, 49.6%, down from nearly 70% a week ago, according to data from CME Group.

Recent comments from Fed officials have helped drive the doubt.

Susan Collins, president of the Federal Reserve Bank of Boston, said late Wednesday that it’s likely appropriate to leave interest rates steady “for some time.” That was a turnaround from her speech last month, when she supported another cut.

The Fed’s job became more difficult recently because of the U.S. government’s six-week shutdown, which delayed many important updates on the job market and other signals about the economy’s strength. That left it less certain of whether the slowing job market or high inflation is the bigger threat.

The stock market mostly rose through the U.S. government’s shutdown, as it has often done historically, but Wall Street is bracing for potential swings now as the government gets back to releasing those updates. The fear is that the data could persuade the Fed to halt its cuts to interest rates.

The “looming data deluge may spur additional volatility in the coming weeks,” according to Doug Beath, global equity strategist at Wells Fargo Investment Institute.

On Wall Street, The Walt Disney Co. helped lead the market lower after falling 8.2%. The entertainment giant reported profit for the latest quarter that topped analysts’ expectations, but its revenue fell short.

That helped offset a jump of 4.8% for Cisco Systems after the tech giant delivered profit and revenue that were bigger than analysts estimated.

Another one of the relatively few stocks to rise was Berkshire Hathaway, the company run by famed investor Warren Buffett. He is known for loving bargains and won’t buy stocks when they look too expensive. Berkshire Hathaway rose 2.1%.

In the bond market, Treasury yields pushed higher, which put downward pressure on prices for stocks and other investments.

The yield on the 10-year Treasury rose to 4.11% from 4.08% late Wednesday.

In stock markets abroad, indexes sagged in Europe following modest gains in Asia.

Tokyo’s Nikkei 225 index rose 0.4%, even as Japanese tech giant SoftBank Group lost another 3.4%. It’s been struggling since it said earlier this week that it had sold all of its $5.8 billion stake in Nvidia.

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AP Writers Teresa Cerojano and Matt Ott contributed.