Tech stocks weigh on Wall Street, ASX set to rise
Stan Choe
Updated ,first published
Most U.S. stocks rose and the Dow Jones Industrial Average rose to another record, but further declines for computer chip companies and other winners of the artificial intelligence boom kept indexes mixed.
The S&P 500 ended the day virtually unchanged, with seven out of 10 stocks in the index gaining less than 0.1 percent despite gains. The Dow index rose 594 points, or 1.1 percent, while the Nasdaq index fell 0.8 percent after erasing its early gains.
The Australian share market is poised for a rally, with futures pointing to a gain of 44 points, or 0.5 per cent, at the open. The ASX was trading flat on Thursday. The Australian dollar was stronger at 69.18¢.
U.S. stocks received broad support from a report showing that U.S. employers added 57,000 jobs to payrolls last month. That growth is a good thing for the economy, but it also fell short of the 100,000 jobs economists expected and was a slowdown from the hiring pace in May.
The positive side of the result, which was weaker than expected, is that it will prevent the inflationary pressure that has accelerated worldwide due to the jumps in oil prices due to the war with Iran. Now that oil prices have fallen below prewar levels, the Federal Reserve may feel less need to raise interest rates several times this year if inflation slows in the coming months.
This could be a relief for investors who prefer low interest rates because they could provide a boost to the economy by making it cheaper for U.S. households and businesses to borrow and spend. Low rates also tend to push up stock and other investment prices.
The yield on the 10-year Treasury bond rose from 3.97 percent before the war to 4.50 percent in the morning hours. However, after the release of US hiring data, it immediately fell to 4.46 percent and then drifted to 4.48 percent.
Investors now see an 82 percent chance that the Fed and its new chairman, Kevin Warsh, will not raise the federal funds rate at their next meeting later this month. This is up from the 71 percent chance seen a day earlier, according to data from CME Group.
“The labor market is not overheating,” said Brian Jacobsen, chief economic strategist at Annex Wealth Management. He said the data could allow the Fed to wait through the summer to get more clues about how inflation is behaving before deciding to raise rates.
On Wall Street, the company behind LaCroix mineral water gained 7.5 percent after National Beverage said it would pay a special dividend of $3.25 for every share investors hold.
Dollar Tree rose 2.4 per cent after the retailer said it had approved a program to send up to US$2.5 billion ($3.6 billion) to shareholders by buying back its shares.
Shares of companies in the crypto industry were also strong, with the price of Bitcoin rising nearly 2 percent, a day after approaching its lowest level since 2024. Robinhood Markets gained 3.8 percent and Coinbase Global gained 3.9 percent.
But further declines for computer chip companies weighed on the indexes. They have come under pressure as stock prices have soared too high due to the AI craze and concerns that all the spending on chips and data centers may not produce as much profit and productivity growth as hoped.
Memory maker Micron Technology erased its early gains and fell 5.5 percent, a day after a 10.6 percent decline. Nvidia fell 1.4 percent and Lam Research fell 10.2 percent. They’ve become among the S&P 500’s heaviest weights because they’ve grown so much in size amid the AI craze.
Nvidia, for example, has a total value of about $4.7 trillion, meaning its stock movements have more weight on the S&P 500 than any other.
Overall, the S&P 500 rose 0.01 to 7,483.24 points. The Dow Jones Industrial Average increased by 594.83 to 52,900.07, and the Nasdaq composite index decreased by 207.36 to 25,382.67.
The continued decline of chip companies on stock markets abroad has caused indices to fall sharply in many Asian markets. South Korea’s Kospi index fell 7.9 percent due to losses from companies such as SK Hynix. That’s its worst decline since a 10 percent drop just over a week ago.
The indexes also fell 2.5 percent in Tokyo and 2 percent in Shanghai.
European indices strengthened and France’s CAC 40 index gained 1.7 percent.
Prices in the oil market fell in the morning but recovered their losses as the day progressed. Brent crude oil, the international standard, rose 0.3 percent to $71.80 per barrel.
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