Oil prices slide, AI stocks weigh on Wall Street, ASX set to rise
Stan Choe
Updated ,first published
Wall Street rebounded after falling oil prices and bond market yields eased pressure on U.S. stocks. Banks, small companies and other stocks that were previously left behind by enthusiasm for AI technology led the way.
The S&P 500 gained 0.4 percent, its 10th gain in the last 11 days, a day after falling from its all-time high. The Dow Jones Industrial Average rose 874 points, or 1.7 percent, to a record high, while the Nasdaq composite fell 0.1 percent. The Australian share market will move higher, with futures pointing to a gain of 32 points, or 0.4 per cent, when it opens at 6.35am (AEST). The ASX fell 1.1 per cent on Thursday.
The price of Brent crude oil rose to $95.03 per barrel from a 2.8 percent decrease. That gave way to some of this week’s rise caused by recently flared conflicts between Iran and the United States and its allies.
The expectation on Wall Street seems to be that the United States and Iran will eventually agree to reopen the Strait of Hormuz to oil tankers. We hope this will improve the flow of crude oil, lower oil prices and remove some of the upward pressure on inflation hurting the world. Such hopes, along with strong profit reports from U.S. companies, helped the S&P 500 begin a nine-day winning streak that ended Wednesday, one day shy of its longest streak in three decades.
Shares of smaller companies led the way, and the Russell 2000 index, which includes the smallest US stocks, rose 1.4 percent. They may reap the biggest benefits of falling interest rates, and the yield on the 10-year Treasury note fell to 4.47 percent from 4.49 percent late Wednesday as oil prices fell.
Lower yields could make it cheaper for companies to borrow cash; many small companies need to do this to grow.
Banks also contributed to the market’s lead, including gains of 5 percent for Goldman Sachs, 4.7 percent for Fifth Third Bancorp and 4.4 percent for U.S. Bancorp.
They more than offset the losses of some AI stocks that suddenly fell into the background after dominating the market.
Broadcom tumbled 12.6 percent, even though both the chip company’s profit and revenue beat analysts’ expectations. CEO Hock Tan said AI semiconductor revenue more than doubled to $10.8 billion in the quarter and demand is gradually increasing. It predicts AI semiconductor growth will reach 200 percent this quarter.
But investors could be asking for even more, with Broadcom’s shares emerging up 38.5 percent year-to-date. That topped the S&P 500 index’s already strong 10.3 percent rise, making Broadcom one of Wall Street’s biggest and most influential stocks.
Analysts say AI stocks may have become too expensive by riding too high, and the broader U.S. stock market could be poised to slow after a streak of nine consecutive weeks, the S&P 500’s longest winning streak since 2023.
Other AI winners likewise gave back some of their big gains. Micron Technology, the last company to push its total value above $1 trillion due to AI enthusiasm, fell 7.7 percent.
CrowdStrike Holdings fell 3.8 percent, even though the cybersecurity company’s profit and revenue in the latest quarter beat analysts’ expectations. CEO George Kurtz said the latest quarter was a time when “the worlds of cybersecurity and artificial intelligence collided” and the company said it was splitting its shares to make the share price more affordable.
However, the stock entered the day with a 59.5 percent increase so far. Analysts said forecasts for some financial measures generally underperformed.
Outside of technology, PVH Corp., the company behind the Calvin Klein and Tommy Hilfiger brands. Although it exceeded Wall Street’s first-quarter sales and profit targets, it lost 20.2 percent of its value. Chief executive Stefan Larsson warned that customers in the region were feeling the “long-lasting effects of the pressing Middle East conflict”.
Overall, the S&P 500 rose 30.63 points to 7,584.31. The Dow Jones Industrial Average rose 874.86 points to 51,561.93 points and the Nasdaq composite index fell 23.02 points to 26,830.96 points.
Meanwhile, reports on the US economy were mixed. Slightly more U.S. workers filed for unemployment benefits last week, one said, which could indicate a slowdown in the relatively solid U.S. labor market.
Indices in foreign stock markets rose in Europe after the weak closing in Asia.
South Korea’s Kospi index fell 1.8 percent, Hong Kong’s Hang Seng index fell 1.5 percent and Japan’s Nikkei 225 index dropped 1.4 percent.
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