Wall Street gets AI boost, ASX set to rise
Stan Choe
The US stock market is heading for more records as the winners of the AI boom continue to soar.
The S&P 500 rose 0.1 percent on the day after hitting an all-time high. The Dow Jones gained 168 points, or 0.3 percent, and the Nasdaq composite was mostly unchanged. All three indices erased their modest losses since the morning hours.
The Australian share market is poised for a rally, with futures pointing to a gain of 25 points, or 0.3 per cent, at the open. The ASX fell on Tuesday. The Australian dollar was trading at 71.81¢.
AI chip companies helped boost Wall Street. Their growth accelerated as customers hungered for more AI computing power, with Broadcom up 3 percent.
Marvell Technology jumped 29.5 percent for its best day in three years after Nvidia CEO Jensen Huang suggested at a conference in Taiwan that Marvell could be “the next trillion-dollar company.” The latest entry into the growing club was made last week by Micron Technology, which is likewise riding the AI wave. The total value of Nvidia, which lost value by 0.4 percent, exceeded $5.8 trillion ($8.1 trillion).
Shares of Hewlett Packard Enterprise rose 16.5 percent after reporting a profit that beat analysts’ expectations in the latest quarter. He credited demand from customers developing AI capabilities.
Generac rose 6 percent after it said it signed a deal to provide backup power generators to an unnamed “leading hyperscale data center operator.”
Such “hyperscalers” are spending enormous amounts of money building massive AI data centers powering what advocates believe will be the next big revolution for the global economy.
Alphabet is one of them, and Google’s parent company has announced that it has raised US$80 billion in cash to help cover its investments by selling shares. It plans to spend as much as $190 billion on equipment and other investments this year.
That’s more than the value of The Walt Disney Co.’s entire stock, and Alphabet predicts its capex will “increase significantly” next year.
Such large sums raise the question of whether AI can deliver the profits and productivity needed to make the entire investment worth it. Critics were already talking about the possibility of a bubble in AI investment, and Alphabet’s shares fell 2.5 percent.
Analysts say U.S. stocks may be poised to slow after a nine-consecutive week-long winning streak, the S&P 500’s longest winning streak since 2023. The rise was driven by strong profit reports from US companies as well as hopes that the US and Iran would reach an agreement on reopening the Strait of Hormuz. This will allow oil to flow freely from the Persian Gulf again and hopefully its price will drop.
Prices in the oil market have calmed down after Monday’s recovery. Brent crude, the international standard, rose 1 percent to $95.96 a barrel, but that’s still well above its pre-war level of around $70.
In the bond market, Treasury yields have remained relatively stable.
The yield on the 10-year Treasury note fell to 4.45 percent from 4.47 percent at the end of Monday. It jumped briefly following a report that said U.S. employers posted far more jobs in late April than economists expected; This is a potential signal of the continued health of the U.S. labor market. But it quickly flashed back to just before the report was released.
Recent high yields around the world have threatened to slow economies and drive down the prices of stocks and every other investment. They have already pushed the average long-term US mortgage rate to its most expensive level in nine months and could restrict companies from borrowing to build the AI data centers that have recently fueled growth of the US economy.
Indices on stock markets abroad rose in most of Europe and Asia.
Hong Kong’s Hang Seng rose 2.5 percent, one of the biggest moves in the world.
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The Market Summary newsletter is a summary of the day’s transactions. Let’s each take ittoday afternoon.
