NEW YORK — Back down goes Wall Street. U.S. stocks are resuming their slide Thursday, led by the market’s AI superstars that are now feeling the painful downside of big expectations.

The S&P 500 was down 0.9% in morning trading, nearly erasing its mini-recovery from the prior day that had helped it claw back some of its sharp drop over recent weeks. The Dow Jones Industrial Average was down 283 points, or 0.7%, as of 10:20 a.m. Eastern time, and the Nasdaq composite was 0.9% lower.

Semiconductor companies and their suppliers were particularly heavy weights on the market, after soaring to staggering heights in recent years because of the frenzy around artificial-intelligence technology.

Marvell Technology Felt Huge Drop

Marvell Technology dropped 16.8% even though it reported results for the latest quarter that edged past analysts’ forecasts. It also said it expects revenue growth in the current quarter of more than 60% from the prior year, give or take a bit.

But that wasn’t enough for investors, who have grown used to AI-related companies trouncing expectations.

The poster child of the AI boom, Nvidia, slid 2.1%, while Broadcom lost 2.7% ahead of its earnings report that will arrive after trading ends for the day. They were two of the three heaviest weights on the S&P 500.

AI superstars had been dominating Wall Street for years, helping it to run to record after record. But those soaring performances, including a nearly 820% surge for Nvidia from 2023 into 2024, had critics saying prices had grown too expensive. They’re also facing threats as Chinese companies develop their own AI offerings, with DeepSeek famously saying it didn’t need to use Nvidia’s most expensive chips.

The recent stumbles for AI winners are hitting the market when worries are already rising about a weaker-than-expected U.S. economy and about President Donald Trump’s tariffs.

Trump gave a one-month exemption on Wednesday for U.S. automakers on his stiff new tariffs for Mexican and Canadian imports That resuscitated hopes on Wall Street that Trump is using tariffs as just a tool for negotiations and that he may ultimately avoid a worst-case trade war that grinds down economies and sends inflation higher.

But Trump is still pressing ahead with other tariffs scheduled to take effect April 2, and most of his tariffs on China, Mexico and Canada remain in place.

“Much will depend on whether these new tariffs prove temporary or are toned down,” according to strategists at BNP Paribas. “But even if they are ultimately removed, we anticipate lasting damage to global economic activity.”

US Households Brace for Higher Inflation Due to Tariffs

U.S. households are already bracing for higher inflation because of the tariffs, while U.S. businesses say they’re confronting “chaos” because of all the uncertainty coming out of Washington.

Such reports have raised the possibility of a worst-case scenario known as “stagflation.” It’s something that doesn’t happen often, where the economy is stagnating and inflation is high, and policy makers at the Federal Reserve don’t have a good tool to fix it.

That has a lot of Wall Street’s attention on a report coming Friday from the U.S. Labor Department, which will show how many workers U.S. employers hired last month. A solid job market, which has allowed for solid spending by U.S. households, has been the linchpin preventing a recession.

Some big retailers, though, have been offering warning signals recently about how much U.S. consumers can keep spending.

Macy’s Reports Weaker Revenue

Macy’s on Thursday reported slightly weaker revenue for the end of 2024 than analysts expected, though its profit topped expectations. It also gave a forecast for profit in 2025 that fell short of analysts’. Its stock fell 2.7%

It was a similar story for Victoria’s Secret, which beat Wall Street’s fourth-quarter sales and profit forecasts but gave a revenue forecast for the upcoming year that fell short of analysts’ expectations. Its shares fell 6%.

In stock markets abroad, indexes were mostly higher in Europe after the European Central Bank cut interest rates, as was widely expected.

German stocks rallied 1.1% as the market continues to feel reverberations from an agreement by the two parties that will form the country’s next government to loosen constitutional limits on borrowing. It’s a major turnaround in German budget policy and opens the way for a trillion or more in new borrowing and spending over the next decade.

Stocks also rose in Asia, including jumps of 3.3% in Hong Kong and 1.2% in Shanghai.

China’s commerce minister said Thursday that his country will not yield to bullying and that its economy can weather higher tariffs imposed by Trump, though he added that there are “no winners in a trade war.”

In the bond market, the 10-year Treasury yield rose to 4.33% from 4.28% late Wednesday.