Stock indexes fall on AI angst while gold and silver rise with oil

By Sinéad Carew and Marc Jones

NEW YORK/LONDON, Dec 17 (Reuters) – MSCI’s global equities gauge fell on Wednesday, pressured by U.S. technology stocks, while silver prices hit a record high and gold rose for a seventh straight day on renewed hopes for Federal Reserve rate cuts and after U.S. President Donald Trump’s latest move in Venezuela created safe-haven demand.

Oil prices settled higher after Trump ordered a “blockade” of all sanctioned oil tankers entering and leaving Venezuela, as Washington increased pressure on Nicolas Maduro’s government by targeting its main source of income.

Elsewhere, Fed Governor Christopher Waller, who is expected to be interviewed as a potential replacement for Fed Chair Jerome Powell, said the U.S. central bank has room to cut interest rates amid signs of job market weakness.

In U.S. equities, technology stocks were weighing down the S&P 500 amid the latest fears of an artificial intelligence bubble. Shares of AI chip leader Nvidia were the biggest drag, closing down 3.8%. Reuters reported that Alphabet’s Google is working to erode Nvidia’s software advantage.

Oracle shares closed down 5.4% even after it looked to reassure investors by announcing that talks for an equity deal to support a data center project were on schedule and do not include Blue Owl Capital, after a report of stalled negotiations between the two companies. 

“It does appear there is now real market fatigue in this singular AI infrastructure story, and the circularity issue in revenue, the rationalization of capex, and the fact that not all players can win at once, are seemingly becoming more accepted by markets,” said David Bahnsen, chief investment officer at the Bahnsen Group.

Ross Mayfield, investment strategist at Baird Private Wealth Management, said there was “percolating anxiety about the AI trade.”

On Wall Street the Dow Jones Industrial Average fell 228.29 points, or 0.47%, to 47,885.97, the S&P 500 fell 78.83 points, or 1.16%, to 6,721.43 and the Nasdaq Composite fell 418.14 points, or 1.81%, to 22,693.32.  

MSCI’s gauge of stocks across the globe fell 8.16 points, or 0.81%, to 994.69.

Earlier, the pan-European STOXX 600 index ended its trading session virtually unchanged.

Investors pushed U.S. Treasury yields higher as they waited for the latest inflation reading, due on Thursday. Traders have been struggling to assess delayed data as it shows a less clear picture of the U.S. economy after a 43-day federal government shutdown. 

The yield on benchmark U.S. 10-year notes rose 0.8 basis points to 4.157%, from 4.149% late on Tuesday while the 30-year bond yield rose 0.6 basis points to 4.8293%.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 1 basis point to 3.489%.

In currencies, sterling fell after an unexpected drop in UK inflation all but guaranteed the Bank of England would cut interest rates, while the dollar rose as markets awaited central bank decisions around the world and weighed Fed commentary. The UK’s pound weakened 0.36% to $1.3372.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.2% to 98.41. 

The euro was down 0.06% at $1.1739 with the European Central Bank in the spotlight on Thursday, when it is expected to keep rates steady.

Against the Japanese yen, the dollar strengthened 0.67% to 155.74 as investors bet that Japan’s central bank would hike rates on Friday.

Regaining some ground lost in the previous four sessions, oil rallied on Wednesday after Trump’s Venezuelan blockade order raised some concerns about supply.

U.S. crude settled up 1.21%, or 67 cents, at $55.94 a barrel and Brent settled at $59.68 per barrel, up 1.29%, or 76 cents, on the day.

In precious metals, silver prices surpassed $66 an ounce for the first time and gold firmed, as hopes of rate cuts and escalating geopolitical tensions sent some investors into safer bets.

Spot silver rose 4.2% to $66.46 while spot gold rose 0.94% to $4,344.09 an ounce. U.S. gold futures rose 1.09% to $4,351.40 an ounce.

(Reporting by Sinéad Carew, Abigail Summerville and Karen Brettell in New York; Marc Jones in London, Rae Wee in Singapore; Johann M Cherian, Shashwat Cauhan, Pablo Sinha and Noel John in Bengaluru. Editing by Chris Reese, Nick Zieminski and Nia Williams)