Oil prices slide, AI stocks weigh on Wall Street, ASX set to rise
Stan Choe
Most US stocks are rising as oil prices fall, but declines in influential AI winners are keeping Wall Street in check.
The S&P 500 index rose 0.4 percent on the day after falling from all-time highs and yet to match its longest winning streak in three decades. In afternoon trading, the Dow Jones rose 812 points, or 1.6 percent, while the Nasdaq composite rose 0.1 percent. The Australian share market is poised to rise, with futures pointing to a gain of 32 points, or 0.4 per cent, at the open at 4.53pm AEST. The ASX fell 1.1 per cent on Thursday.
The vast majority of stocks on Wall Street rose, including 2 in 3 stocks in the S&P 500. The price of Brent crude oil rose to $94.43 per barrel from a 3.5 percent decline. 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 earnings reports from U.S. companies, helped the S&P 500 begin a nine-day winning streak that ended Wednesday.
Elanco Animal Health rose 1.5 percent and Zoetis, which sells animal vaccines, rose 2.5 percent on expectations for stronger profits after the U.S. Department of Agriculture confirmed Wednesday that the New World screwworm fly had reached south Texas. The parasite with flesh-eating larvae is threatening the country’s cattle industry for the first time in decades.
Toro gained 1.6 percent after the lawn mower and other equipment seller became the latest U.S. company to post better profits and revenue than analysts expected in the latest quarter. CEO Richard Olson said Toro is seeing strong demand for its products and the company raised its revenue and profit forecasts for the full fiscal year.
Several other companies joined the long list of top analysts’ earnings expectations, but many still fell, especially in the high-flying tech industry.
Broadcom tumbled 11.8 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 US$10.8 billion ($15.1 billion) in the quarter, with demand steadily increasing. It predicts AI semiconductor growth will reach 200 percent this quarter.
But investors may be expecting even more after Broadcom’s shares are up 38.5 percent in the year so far. That topped the S&P 500 index’s already strong 10.3 percent rise, and Broadcom has grown to become Wall Street’s sixth-largest stock and one of its most influential.
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 increase its total value to $1 trillion due to AI enthusiasm, fell 5.3 percent.
CrowdStrike Holdings fell 4.8 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 23.7 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”.
Treasury yields declined due to the impact of oil prices in the bond market. The yield on the 10-year Treasury note fell to 4.46 percent from 4.49 percent at the end of Wednesday. This could ease the pressure not only on stock prices but also on the economy in general.
Easier interest rates could especially help smaller companies because many need to borrow money to grow. Russell 2000 index, which shows the smallest US stocks, increased by 1.3 percent
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. Productivity of U.S. workers rose less than economists expected in the first three months of the year, another report said.
Indices in foreign stock markets started to rise 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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