US STOCKS-Wall Street falls as AI funding jitters hit tech stocks

By Abigail Summerville and Johann M Cherian

Dec 17 (Reuters) - Wall Street's main indexes fell on Wednesday, with the S&P 500 and the tech-heavy Nasdaq at three-week lows as nagging worries about the artificial intelligence trade weighed on technology stocks.

Oracle ORCL.N fell nearly 5% after a report said the cloud company's largest data center partner Blue Owl Capital OWL.N will not back a $10 billion deal for its next facility.

Amazon.com AMZN.O gained 0.3% after reports said the company is in talks to invest about $10 billion in ChatGPT maker OpenAI.

Worries about the broader technology sector taking on more debt to develop artificial intelligence have discouraged risk-taking lately.

"Theres’s percolating anxiety about the AI trade. ... The primary driver is the level of capex and circular nature of some of the spending with OpenAI being at the center of that," said Ross Mayfield, investment strategist at Baird Private Wealth Management.

"The broader question heading into the New Year is about the sustainability and return on investment of all this spending," he said.

AI bellwether Nvidia NVDA.O fell 3.4% while chipmaker Broadcom AVGO.O dropped 5.5%, sending a broader chips index .SOX down 3.3%.

At 2:00 p.m. ET, the Dow Jones Industrial Average .DJI fell 183.16 points, or 0.38%, to 47,931.10, the S&P 500 .SPX lost 66.14 points, or 0.97%, to 6,734.40 and the Nasdaq Composite .IXIC lost 331.85 points, or 1.44%, to 22,779.61.

Six of the 11 major S&P subsectors were trading lower, with technology .SPLRCT down the most, falling 1.9%.

Alphabet GOOGL.O shares fell 2.6% after a Reuters report said its Google unit is taking on a new initiative to erode Nvidia's software advantage.

In the latest on who could take control of Warner Bros Discovery WBD.O, the media company's board rejected Paramount Skydance's PSKY.O $108.4 billion hostile bid, favoring Netflix's NFLX.O binding offer.

Netflix's shares rose 0.9%, while Paramount and Warner Bros were down 3.8% and 2.1%, respectively.

Energy stocks rose along with crude prices as U.S. President Donald Trump ordered a "blockade" of all sanctioned oil tankers entering and leaving Venezuela. ConocoPhillips COP.N and Occidental Petroleum OXY.N gained over 3% each.

Offering some relief for investors was Federal Reserve Governor Christopher Waller, often viewed as a dove on monetary policy. He said that the central bank still had room to cut interest rates against a softening jobs market.

The next significant report will be Thursday's consumer inflation data by the Commerce Department.

Declining issues outnumbered advancers by a 1.44-to-1 ratio on the NYSE and by a 1.7-to-1 ratio on the Nasdaq.

The S&P 500 posted 11 new 52-week highs and no new lows while the Nasdaq Composite recorded 74 new highs and 128 new lows.