U.S. stocks ended their longest winning streak since May on Tuesday, as reports concerning Oracle triggered investor exodus from major technology stocks, driving sector rotation in the market.

The artificial intelligence-fueled rally has raised concerns that the S&P 500's gains have become excessive.

Technology giants weighed on the index following a report indicating Oracle's cloud computing business margins fell short of many Wall Street expectations.

Tesla shares closed down more than 4% after the company unveiled a new Model Y variant priced under $40,000.

Dell Technologies gained 3.5% as robust AI demand prompted the company to raise its outlook.

AMD jumped 3.83%, extending Monday's rally. Jefferies upgraded its rating to "buy."

IBM rose 1.54% after announcing plans to integrate Anthropic's Claude large language models into its software solutions.

Investor optimism has intensified in recent months, with many appearing focused on chasing gains while overlooking risks such as potential government shutdowns and elevated valuations.

Goldman Sachs' trading desk reported that client bullish sentiment reached its highest level since December last year. Barclays' sentiment indicator continues hovering near levels reflecting excessive market optimism. A similar Bloomberg Intelligence indicator has returned to "euphoric" territory.

"After such a strong rally, it's not surprising to see the market enter a consolidation phase. However, we believe this stock market rebound has solid fundamental support and should continue to underpin the market," said Ulrike Hoffmann-Burchardi from UBS Global Wealth Management.

Traders also analyzed Federal Reserve officials' remarks, with Fed Governor Steven Milan indicating he expects limited tariff impact on inflation, suggesting the Fed can continue easing policy. Minneapolis Fed President Neel Kashkari warned that any significant rate cuts could drive prices higher.

"Profit-taking risks are rapidly rising across markets, particularly pronounced in the Nasdaq, which could hinder subsequent upside potential," said Chris Montagu from Citi.

Piper Sandler's Craig Johnson expressed continued optimism, especially given macroeconomic tailwinds supporting equities. However, he noted emerging subtle signs of momentum divergence that warrant investor caution, particularly for stocks with excessive gains in recent weeks.

He pointed out: "A brief consolidation or shallow pullback would be welcome to create better risk-reward opportunities."

At market close, the S&P 500 declined 0.4% to 6,714.59 points;

The Dow Jones Industrial Average fell 0.2% to 46,602.98 points;

The Nasdaq Composite dropped 0.7% to 22,788.36 points;

The Nasdaq 100 declined 0.6% to 24,840.23 points;

The Russell 2000 fell 1% to 2,460.538 points.