Stocks Retreat as AI Infrastructure Companies and Chip Makers Fall

Stock indexes are experiencing a downward trend today, as the S&P 500 and Nasdaq 100 indexes reach 3-week lows. The decline is primarily driven by weakness in AI infrastructure stocks and chip makers, which is impacting market sentiment negatively. Homebuilding stocks are also taking a hit, with Lennar leading the pack with a 5% decrease after reporting weaker-than-expected Q4 EPS.

On a more positive note, energy producers are on the rise, with WTI crude oil seeing a more than 1% increase following President Trump’s announcement of an oil blockade on tankers entering and leaving Venezuela. This geopolitical tension is also boosting safe-haven demand for precious metals, with silver reaching a new all-time high.

Federal Reserve Governor Christopher Waller’s dovish comments today have been supportive of both stocks and bonds. Waller noted that the US labor market is currently “pretty soft” with minimal job growth, and inflation is “pretty well anchored” around 2%. He also mentioned that interest rates are still 50-100 basis points above neutral, allowing the Fed room to gradually lower them without haste.

In terms of economic indicators, US MBA weekly mortgage applications fell by 3.8% in the week ended December 12. The purchase mortgage sub-index saw a decrease of 2.8%, while the refinancing mortgage sub-index dropped by 3.6%. Additionally, the average 30-year fixed-rate mortgage rose by 5 basis points to 6.38% from the previous week’s 6.33%.

Looking ahead, this week’s focus will be on US economic news. Thursday will see the release of weekly initial unemployment claims, expected to decrease by 11,000 to 225,000. November CPI is projected to show a 3.1% year-over-year increase, while core CPI is anticipated to rise by 3.0% year-over-year. Friday will bring the release of November existing home sales, expected to increase by 1.2% month-over-month to 4.15 million. Additionally, the University of Michigan’s December consumer sentiment index is expected to be revised upward by 0.2 to 53.5 from the previously reported 53.3.

In the global markets, overseas stock markets are mixed today. The Euro Stoxx 50 is down by 0.24%, while China’s Shanghai Composite closed up by 1.19%. Japan’s Nikkei Stock 225 rebounded from a 2-week low to close up by 0.26%.

Interest rates continue to be a point of focus, with March 10-year T-notes up by 1 tick. The 10-year T-note yield has decreased by 0.4 basis points to 4.141%. European government bond yields are also mixed, with the 10-year German bund yield up by 0.6 basis points to 2.851%, while the 10-year UK gilt yield is down by 6.2 basis points to 4.456%.

In the stock market, AI infrastructure stocks and chip makers are facing a downward trend, causing market sentiment to falter. GE Vernova and Constellation Energy are leading the losses in the S&P 500 and Nasdaq 100, respectively. Homebuilding stocks, including Lennar, DR Horton, and PulteGroup, are also experiencing declines.

On the other hand, energy producers and service providers are on the rise, with WTI crude oil seeing a more than 1% increase. Companies like Devon Energy, ConocoPhillips, and APA Corp are leading the gains. Oracle, Paramount Skydance, Worthington Enterprises, Brown-Forman Corp, and Bally’s Corp are among the top losers in the market today.

Notable gainers include Texas Pacific Land Corp, Albemarle, Lumentum Holdings, Salesforce, General Mills, and Netflix. Texas Pacific Land Corp is up by more than 7% after announcing a strategic agreement with Bolt Data & Energy. Albemarle is leading lithium producers higher, while Lumentum Holdings saw a price target raise from Morgan Stanley. Salesforce is the top gainer in the Dow Jones Industrials index after BTIG initiated coverage with a buy recommendation.

In terms of upcoming earnings reports, General Mills Inc, Jabil Inc, Micron Technology Inc, and Toro Co/The are set to report on December 17, 2025.

Overall, the market continues to be influenced by a mix of factors, including geopolitical tensions, economic indicators, and company-specific news. Investors are closely monitoring developments to navigate the changing landscape of the financial markets.