Wall Street drops to one of its worst days since April on worries about AI stocks and interest rates

Market Performance - The U.S. stock market experienced a significant decline, with the S&P 500 dropping 1.7%, marking its worst day in a month and the second-worst since April's sell-off [2][4] - The Dow Jones Industrial Average fell by 797 points, or 1.7%, while the Nasdaq composite lost 2.3% [2] AI Stocks Impact - Nvidia was a major contributor to the market decline, falling 3.6%, alongside other AI-related stocks such as Super Micro Computer (-7.4%), Palantir Technologies (-6.5%), and Broadcom (-4.3%) [3] - Concerns are rising regarding the sustainability of AI stock prices after significant gains, with Palantir's stock up nearly 174% year-to-date [3][4] Interest Rate Expectations - There is growing uncertainty about the Federal Reserve's plans to cut interest rates, with current expectations for a third cut this year dropping to approximately 51.9%, down from nearly 70% a week prior [6] - Recent comments from Federal Reserve officials, including Susan Collins, suggest a likelihood of maintaining steady interest rates for an extended period, contrasting previous support for rate cuts [6][7] Economic Context - The performance of AI stocks has been a key driver of market records despite challenges such as a slowing job market and high inflation [4] - The potential halt in interest rate cuts could negatively impact U.S. stock prices, which have surged partly due to expectations of further reductions [5]