US stocks drop, Alibaba surges on new AI investments

Major US indices pulled back further from Monday’s record closes following comments Tuesday from Fed chief Jerome Powell that US stocks are “fairly highly valued”

US stock markets dropped for a second straight session on Wednesday while Chinese online retail giant Alibaba surged on new AI investments.

Major US indices pulled back further from Monday’s record closes following comments Tuesday from US Fed chief Jerome Powell that US stocks are “fairly highly valued.”

We’ve given up some ground today, said FHN Financial’s Chris Low. It really does look mostly.

Briefing.com described Wednesday’s trading as a shift from the bargain-hunting impulse that has surfaced after other recent dips. But Wednesday’s losses were “modest in the scope of recent gains,” Briefing said in its note.

Following a mixed day on European stock markets, the broad-based S&P 500 finished down 0.3 per cent.

Trade Nation analyst David Morrison characterized Tuesday’s selloff as shallow.

The general feeling is that any pullback is a buying opportunity, he said.

A key driver of the rally has been expectations that the central bank will continue to cut US interest rates before the end of the year.

Investors are awaiting the release on Friday of the personal consumption expenditure (PCE) index, the bank’s favored gauge of US inflation, and key American jobs figures next week.

Meanwhile, Alibaba CEO Eddie Wu’s unveiling of plans to ramp up AI spending by about $53 billion provided a positive catalyst for tech stocks as well.

Alibaba shares surged more than eight per cent.

The industry’s development speed far exceeded what we expected, and the industry’s demand for AI infrastructure also far exceeded our anticipation, Wu told an audience at the firm’s annual developer conference in Hangzhou, China.