New York — Wall Street’s main indexes declined Wednesday, led by heavy losses in technology stocks, as investors reacted to reports of funding hurdles for Oracle’s next data center and broader concerns about tech sector debt.
The S&P 500 and Nasdaq Composite fell to three week lows, signaling continued investor caution in a year dominated by artificial intelligence enthusiasm.
Oracle (ORCL) shares dropped 5 percent after a report indicated that the company’s largest data center partner, Blue Owl Capital (OWL), will not finance a $10 billion deal for Oracle’s upcoming facility.
Analysts said the development highlighted challenges for tech firms relying on debt to fund AI related infrastructure.
Six of the 11 major S&P 500 subsectors were trading lower, with technology stocks down 1.9 percent. The benchmark index is on track for its fourth consecutive session of declines.
At 11:39 a.m. ET, the Dow Jones Industrial Average fell 105.49 points, or 0.22 percent, to 48,008.04. The S&P 500 lost 53.59 points, or 0.79 percent, to 6,746.67, while the Nasdaq Composite fell 292.03 points, or 1.26 percent, to 22,816.43.
“Investors are beginning to recognize that not all AI infrastructure bets will pay off and that funding strategies must be realistic,” said David Bahnsen, chief investment officer at the Bahnsen Group.
“The market is showing fatigue over a singular AI narrative, and capital expenditure rationalization is becoming more accepted.”
Shares of Alphabet (GOOGL) dropped 2.6 percent amid reports the company is exploring initiatives to challenge Nvidia’s software lead.
Nvidia (NVDA) fell 1.8 percent, hitting a three week low and dragging the broader semiconductor index down 3 percent.
In contrast, energy stocks advanced, supported by a 2 percent jump in crude prices after US President Donald Trump ordered a blockade of all sanctioned oil tankers entering or leaving Venezuela.
ConocoPhillips (COP) and Occidental Petroleum (OXY) each gained over 2 percent.
Homebuilder Lennar (LEN) saw a 5.6 percent drop after missing fourth quarter profit estimates, reflecting persistent challenges in the residential construction market.
Meanwhile, the financial sector remained mixed as investors assessed potential impacts of interest rate policy and corporate earnings.
“Tech valuations have been stretched for months, and Oracle’s funding news underscores the risks of leveraging debt for ambitious AI projects,” said Maria Chen, a portfolio manager at Summit Capital.
“Investors are rotating toward small caps and sectors like healthcare and banks that offer steadier growth.” Retail investors echoed similar concerns.
“I’ve been watching tech closely this year, and these setbacks make me cautious about adding more exposure,” said John Ramirez, a New York-based individual investor.
The Federal Reserve may influence market sentiment as well. Fed Governor Christopher Waller, often viewed as a dovish voice, said the central bank still has room to cut interest rates amid a softening labor market.
Investors are now awaiting Thursday’s consumer inflation data from the Commerce Department, which could provide further guidance on economic trends heading into 2026.
With two weeks remaining in the year, Wall Street is poised for its third consecutive set of annual gains, buoyed by rate cut expectations and optimism around AI.
However, concerns over tech sector leverage and valuation may continue to drive rotations into smaller companies and non tech sectors.
Wednesday’s declines reflected a mix of corporate financing challenges, sector specific concerns, and broader economic uncertainty.
While the energy and financial sectors showed resilience, technology stocks led the market lower, highlighting the ongoing scrutiny of AI investments and the sustainability of tech valuations.
Analysts said upcoming economic data and corporate earnings will likely shape investor sentiment as the year closes.
