AI is pretty complicated - US Market Wrap

- A selloff in technology stocks weighed heavily on trading on Wednesday, with the most recent string of Federal Reserve speakers reinforcing the notion that interest rates must continue to rise in order to combat inflation.

- Their tone was clearly intended to catch the market's attention in what appeared to be a concerted effort to counter the dovish read of Jerome Powell's interview on Tuesday, according to Krishna Guha at Evercore ISI. The message was clear from Fed Bank of New York President John Williams to Minneapolis counterpart Kashkari and Governor Waller: policy may need to be tight for a while.

- Those remarks only added credence to the recent hot trade in the rate-options market, where several large wagers on the Fed's benchmark reaching 6% have surfaced. That's nearly a percentage point higher than the consensus. According to several market observers, such hawkish positioning makes it difficult for equities to continue rising, especially after the rally that brought the S&P 500 into overbought territory.

- The S&P 500 fell more than 1%, nearly wiping out Tuesday's rally. The Nasdaq 100 underperformed, with Alphabet down more than 7% on concerns that its new artificial intelligence chatbot Bard may produce inaccurate responses. Other megacaps, such as Apple and Amazon also fell, while Microsoft  stock lost ground after briefly exceeding $2 trillion in market value.