U.S. stocks closed lower on Tuesday as a leaked internal report from OpenAI rattled the artificial intelligence trade and sent semiconductor and cloud-infrastructure names sliding. The selloff was concentrated in technology, where fears about the sustainability of AI spending overwhelmed an otherwise solid batch of corporate earnings. Defensive pockets of the market held up better, with consumer staples and industrials partially cushioning the blow for the blue-chip Dow.
The S&P 500 (SPI:SP500) fell 35.11 points, or 0.49%, to close at 5,138.80. The Nasdaq Composite bore the brunt of the selling, dropping 223.30 points, or 0.90%, to finish at 24,663.80. The Dow Jones Industrial Average fared best of the three benchmarks, slipping 168.39 points, or 0.34%, to settle at 49,141.93. All three indexes pulled back from record territory set in Monday’s session, as traders reassessed the premium built into AI-linked names.
What Moved Markets
The catalyst was a report indicating that OpenAI’s revenue and new-user growth had fallen short of internal targets, with CFO Sarah Friar reportedly warning leadership that the company may struggle to cover its computing contracts if top-line growth does not accelerate. The news rippled across the chip complex and cloud sector. Nvidia (NVDA) slid 2.5%, Broadcom (AVGO) fell 4.8%, and Micron Technology (MU) dropped 4.3%. Oracle (ORCL), a key cloud partner for OpenAI, shed 5.2% on worries about the durability of its AI-driven data-center buildout.
Notable Movers
General Motors (GM) was the session’s standout winner, surging after the automaker crushed first-quarter estimates with $4.2 billion in adjusted earnings, well above the $3 billion consensus. Management raised full-year guidance to $11.50 to $13.50 per share, citing resilient truck and SUV demand even as the national average for a gallon of regular gasoline climbed to $4.18, its highest level since August 2022.
Coca-Cola (KO) gained nearly 4% after posting adjusted earnings of 86 cents per share against analyst expectations of 81 cents, with net revenue of $12.47 billion topping the $12.24 billion forecast. The results marked the first quarterly report under new CEO Henrique Braun and gave the Dow its biggest single-stock boost of the day. Nucor (NUE) added 3.8% on a first-quarter earnings beat at the steelmaker.
On the losing side, Spotify (SPOT) tumbled roughly 12% despite posting record quarterly profit of 721 million euros. Investors punished the stock after second-quarter guidance for operating income and paying-subscriber growth came in below expectations. United Parcel Service (UPS) fell 5% as domestic package volume dipped 2.3%, while Illinois Tool Works (ITW) dropped 9% amid cautious analyst sentiment tied to ongoing geopolitical tensions.
Looking Ahead
Investors will be watching closely for more clarity on AI spending trajectories as mega-cap tech names prepare to report later this week. Any read-through on enterprise demand for cloud and chip capacity could either deepen Tuesday’s pullback or reignite the rally. On the economic calendar, consumer confidence data and a fresh batch of housing numbers are due in the coming sessions. With crude oil prices elevated and inflation concerns lingering, markets may remain sensitive to any signals from the Federal Reserve about the path of interest rates heading into the summer.