Update (4:40 PM ET, Dec. 17, 2025): The S&P 500 ended Wednesday’s session sharply lower, extending a multi-day slide as investors reassessed the economics of the AI boom and its financing needs—while an oil rally offered only limited ballast.
S&P 500 closes near the day’s low after a tech-led selloff
The S&P 500 fell 78.83 points (‑1.16%) to close at 6,721.43, marking the index’s fourth straight daily decline and pushing the benchmark and Nasdaq to their lowest levels in about three weeks. Reuters
Trading action underscored the risk-off tone: the S&P 500 opened around 6,802.88, traded as high as roughly 6,812, and sank to about 6,720—finishing close to the bottom of that range. Bloomberg
The decline wasn’t isolated to the S&P 500. The Dow slipped 0.47%, while the Nasdaq Composite dropped 1.81% as heavyweight technology shares dragged the broader market. Reuters
Despite the late-year pullback, U.S. equities remain higher for 2025: the S&P 500 is still up about 14% year-to-date, with the Nasdaq up roughly 17% and the Dow up about 13%. AP News
Why stocks fell: “percolating anxiety” around the AI trade
Wednesday’s market story centered on a theme that has surfaced repeatedly in December: investors are increasingly demanding proof that AI spending can deliver durable, profitable returns—without destabilizing balance sheets.Reuters summarized that “AI funding jitters” weighed on technology stocks, with investors wary of mounting capex and the circular nature of some funding plans. Reuters
Among the most important pressure points:
Oracle’s data-center financing shock rippled across AI infrastructure names
Oracle fell 5.4% after a report said its key data center partner Blue Owl would not back a $10 billion deal for a Michigan facility tied to the Stargate AI infrastructure push, raising fresh questions about funding and project economics. Reuters
Oracle later said talks for an equity deal on the project are “on schedule” and do not include Blue Owl, but the market’s reaction highlighted how sensitive AI infrastructure plays have become to funding headlines. Reuters
Chip stocks dragged the index as expectations reset
AI bellwether Nvidia fell 3.8% and Broadcom dropped 4.5%, pulling a broader chip index sharply lower. Reuters
The selloff echoed a pattern that has emerged in recent weeks: even when earnings and demand trends look strong, stocks tied to AI “enablers” can drop when investors worry valuations and spending trajectories have outrun near-term payoffs. AP News
Alphabet slid after a new front opened in the AI platform war
Alphabet shares fell after Reuters reported Google is working—alongside Meta—on an initiative to make its TPU chips more compatible with PyTorch, a move aimed at eroding Nvidia’s software advantage. That story added another layer of uncertainty to the AI stack by spotlighting how aggressively mega-cap players are trying to reduce dependence on Nvidia’s ecosystem. Reuters
What helped (a little): Energy rose as crude jumped on Venezuela tensions
Energy was one of the few bright spots after oil prices gained following news that President Donald Trump ordered a “blockade” of sanctioned oil tankers entering and leaving Venezuela. Reuters
In equities, that translated into outsized moves for key producers: ConocoPhillips and Occidental both rose more than 4%, helping cushion (but not offset) the tech-led slump. Reuters
Rates, the Fed, and the next catalyst: inflation data risk is back in focus
While stocks sold off, Treasury yields were relatively steady, with the 10-year yield around 4.15% in Reuters’ market wrap—suggesting the session was less about a sudden rates shock and more about equity-specific positioning and AI narrative fatigue. Reuters
Still, the Fed remains central to the outlook:
- Fed Governor Christopher Waller said monetary policy is still in restrictive territory and that the Fed has room to cut, pointing to a softening labor market (though not arguing for a rush). Reuters
- Separately, Reuters’ “Morning Bid” noted markets are still pricing rate cuts in 2026, but “inflation anxiety” has been creeping back into the narrative, complicating the typical year-end “Santa rally” playbook. Reuters
Thursday’s CPI is the next big test—and it may be unusually messy
The Consumer Price Index (CPI) for November 2025 is scheduled for Thursday, Dec. 18, at 8:30 a.m. ET, according to the Bureau of Labor Statistics. Bureau of Labor Statistics
But traders are bracing for an unusual print. A market preview from MNI warned that the shutdown-disrupted CPI update “threatens to be messy,” noting October CPI data collection was precluded and that reported inflation may need to be interpreted on a two-month change basis rather than the standard month-to-month cadence. Market News
That dynamic matters for the S&P 500 because the index is perched near record territory after a strong year—making it more sensitive to inflation surprises that could shift expectations for the path of rate cuts.
After-hours watch: Micron surges on blowout guidance
One late-day development could shape Thursday’s tone for semiconductors: Micron jumped in after-hours trading after forecasting results well above expectations, citing booming AI-driven demand for high-bandwidth memory. Reuters
While after-hours moves don’t change the S&P 500’s official close, a strong reaction in a major chip-and-AI supply-chain name can influence futures and sentiment going into the next session—particularly after a day when semis were the epicenter of downside pressure.
2026 outlook: Bulls still see upside—but the range of forecasts is widening
With the S&P 500 still up solidly in 2025, the debate has shifted from “can the rally continue?” to “how much can it reasonably continue—and what breaks it?”
The bullish case: earnings growth + AI capex keep the floor under stocks
A CBS News survey of Wall Street views emphasized that strategists still see conditions as supportive for equities in 2026, with some expecting continued gains driven by corporate earnings and AI-linked investment. In that roundup, UBS Global Wealth Management’s Mark Haefele projected the S&P 500 could reach 7,300 by mid-2026 and 7,700 by year-end 2026, while J.P. Morgan projected 13%–15% upside next year in a prior research note cited by CBS. CBS News
The cautious case: valuations, AI ROI, and political/Fed uncertainty raise downside risk
At the same time, more conservative forecasts are getting louder. Investopedia highlighted Interactive Brokers strategist Steve Sosnick projecting the S&P 500 around 6,500 by the end of 2026—framing it as “cautious” rather than outright bearish—amid concerns about stretched valuations, AI spending sustainability, and potential turbulence tied to a U.S. midterm election year and leadership changes at the Fed. Investopedia
Macro risks aren’t limited to tech. A Reuters survey of U.S. finance chiefs found CFOs expect prices to rise around 4.2% in 2026, with tariffs still a top concern—an outlook that could keep inflation stickier than equity bulls would like. Reuters
Bottom line for the S&P 500 after today’s close
As of 4:40 PM ET, the message from markets is clear: the S&P 500’s 2025 gains are intact, but leadership is fragile, and investors are increasingly unwilling to pay any price for AI exposure—especially when funding questions and capex discipline dominate the headlines.
The next 24 hours may matter more than usual. Thursday’s CPI could reset rate expectations, while after-hours strength in Micron offers a reminder that parts of the AI supply chain are still delivering blockbuster numbers—even as the broader AI trade faces a tougher “show me” moment. Reuters
