AI Stocks Drag S&P 500 And Nasdaq Under Key Lines; Palantir, Reddit, Tesla Are Stocks To Watch

Headwinds from the artificial intelligence trade pushed the S&P 500 and the Nasdaq composite below key chart levels Wednesday. AI stocks like Nvidia (NVDA), Broadcom (AVGO), and Oracle (ORCL) sold off sharply midway through the final full trading week of 2025.

Blue chips on the Dow Jones Industrial Average dropped 0.5%, or 228 points. The S&P 500 declined 1.2%, and the Nasdaq tumbled 1.8%. Finally, the small-cap Russell 2000 lost 1.1%.

The S&P 500’s technology and communication services sectors were the index’s biggest losers, while the energy and consumer staples sectors were its biggest winners. Volume rose on the Nasdaq and the New York Stock Exchange compared with Tuesday’s trading day.

Oracle stock served as the day’s flashpoint in the tech and AI space, with the company pushing back on a report about funding for a planned $10 billion data center facility. The AI trade broadly has run into resistance, in part on concerns that spending is accelerating among companies working to meet robust AI demands.

In the bond market Wednesday, the 10-year Treasury yield edged up to 4.15%.

Up next, Wall Street awaits the consumer price index and initial unemployment claims, both due out Thursday morning. Economists anticipated November’s core CPI, which excludes food and energy, to rise 0.3% month over month. They anticipate a 3% annual increase.

Meanwhile, jobless claims are expected to fall to 225,000 vs. 236,000 in the previous week, per Econoday.

Dow Jones Index Winners And Losers

Inside the Dow Jones 30 index on Wednesday, Chevron (CVX) and Procter & Gamble (PG) were among the top performers, with gains of nearly 2% apiece.

On the Dow’s downside, Caterpillar (CAT) and Nike (NKE) were losers, down 4.6% and 2.1%, respectively. In the Nasdaq-100 index, Diamondback Energy (FANG) and Gilead Sciences (GILD) climbed 3.4% and 2.2%, respectively, making them two of the best stocks of the day. On the downside, Constellation Energy (CEG) tumbled 6.7%, breaking below the 50-day moving average.

All of the Magnificent Seven stocks ended the session lower, leaving the Roundhill Magnificent Seven (MAGS) exchange-traded fund down 2.2%. Nvidia slid 3.8%, closing at its lowest price since Sept. 17.

The Innovator IBD 50 ETF (FFTY) dropped 2.2%. At the same time, Investor’s Business Daily’s IBD 50 list had several big movers in the session, including Comfort Systems (FIX), Nova (NVMI), and Travere Therapeutics (TVTX).

S&P 500 And Nasdaq Slide: What To Do Now

Following significant losses Wednesday, Investor’s Business Daily reduced its recommended exposure level to 60% to 80%. Notably, the S&P 500 and Nasdaq closed below their 50-day moving averages, a key support level.

On Wednesday, both the Nasdaq and NYSE added new distribution days. That takes their respective counts to seven and five.

Due to the recent bearish action, investors should consider reducing exposure to be in sync with the stock market’s health. But keep an eye out for new leadership. Those stocks have strong relative strength lines and are holding up well during the current market volatility.

IBD MarketSurge’s Breaking Out Today list featured just one new stock Wednesday, which makes sense given the market weakness. Earlier this week, Gildan Activewear (GIL) broke out past a 62.56 cup-base entry and is still above the buy point. But the Near Pivot list shrank to six ideas. That’s a sign that leading stocks require more time before new buy points emerge.

Palantir, Reddit And Tesla Are Stocks To Watch

In Wednesday’s weak action among equity indexes, Palantir Technologies (PLTR), Reddit (RDDT), and Tesla (TSLA) were among key stocks to watch.

Palantir stock added a handle to its cup base Wednesday, moving the buy point to 190.39, according to IBD MarketSurge chart analysis. Shares must first find support at their 50-day line.

IBD Leaderboard watch list stock Reddit rose 1.6%, leaving it about 4% below a 240.18 buy point in a cup-with-handle base.

Finally, Tesla stock skidded 4.6%, giving up its latest entry at 474.07. Wait for a decisive retake of the entry before considering a new purchase of shares.

View the General Market Indicators chart page here.

Be sure to follow Scott Lehtonen on X at @IBD_SLehtonen for more on the Dow Jones Industrial Average and stock market news.

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