Wall Street steadies, ASX set to slip; Paramount-Warner Bros deal paused by judge
Stan Choe
Updated ,first published
Wall Street drifted to a quiet end on Monday after chipmaker stocks and other winners of the AI boom pared some of their recent losses.
The S&P 500 index fell 0.2 percent, its first losing week in three weeks and only its third since the end of March. The Dow Jones Industrial Average fell 307 points, or 0.6 percent, and the Nasdaq composite was essentially flat after falling less than 0.1 percent.
The Australian share market is poised for a decline, with futures pointing to a loss of 36 points, or 0.4 per cent, at the open. The ASX fell 0.1 per cent on Monday. The Australian dollar was trading at 69.97¢ at 6.22am (AEST).
On Wall Street, Nvidia rose 0.2 percent, remaining strong after Friday’s decline when it was the S&P 500’s heaviest weight. Sandisk rose 2.7 percent after falling 29 percent last week.
Advanced Micro Devices rose 1.6 percent after Microsoft announced an expanded partnership that will use its products for artificial intelligence, including its new Helios product, starting in the second half of the year.
Such stocks have been under pressure for weeks due to concerns that their prices will rise too high due to the enthusiasm brought about by artificial intelligence. On the one hand, companies are raking in billions of dollars in revenue as customers pour money into AI chips and data centers. But all this spending could go to waste if AI doesn’t produce as much profit and productivity as promised.
Wall Street may get some clues on this front when some of the biggest spenders on AI report their latest quarterly results. On Wednesday, Alphabet will tell investors how much it made in the spring and provide updates on its artificial intelligence work.
Companies of all stripes are under pressure to report a strong increase in profits in the spring. They’ll need it to justify big moves in stock prices. Despite the recent tremors in AI stocks, the indexes are near records.
AMC Entertainment soared 26.8 percent after the movie theater operator reported stronger-than-analysts-expected revenue in its latest quarter. He also stated that some movie theaters in Los Angeles and other cities are open. Odyssey More than 85 hours straight from Thursday to Sunday to meet demand.
Domino’s Pizza rose 2.1 percent after reporting stronger-than-expected revenue in the spring. CEO Russell Weiner said the company is seeing growth in orders in both its carryout and delivery businesses, even as the broader industry continues to “face pressure on consumer demand.”
Another restaurant chain, Jersey Mike’s, is starting a promotional tour to drum up interest in its shares, which it plans to sell for between $21 and $25 per share on the New York Stock Exchange in an initial public offering.
It and other businesses face pressure to sell to U.S. households still suffering from high inflation, largely due to higher gasoline prices. The average cost of a gallon of gasoline in the United States has risen above $4 due to high crude oil prices.
The barrel price of Brent crude oil, which fell below $72 at the beginning of this month, roughly the level before the war with Iran, has recently started to rise as the war continues in the Middle East.
On Monday, the price fluctuated between roughly $86 and $91 before settling at $89.22, up 1.3 percent.
The war with Iran prevents oil tankers from using the Strait of Hormuz to carry crude oil from the Persian Gulf to customers, driving up oil prices. S&P Global counted only 127 ships passing through the strait in the week to Sunday; This figure decreased by approximately 50 percent compared to the previous week.
Concerns about expensive oil and high inflation have caused Treasury yields to rise in the bond market; This threatened to slow the economy and drive down stock and other investment prices.
The yield on the 10-year Treasury note rose to 4.59 percent from 4.55 percent late Friday and from 3.97 percent before the war with Iran. Higher yields have caused the average 30-year mortgage rate to rise to the highest level in almost a year.
High yields put pressure on the US stock market, and the majority of stocks fell on Wall Street.
Warner Bros. Discovery’s 3.8 percent decline also helped erase the S&P 500’s gains from earlier in the day. A federal judge ordered them to halt the $110 billion ($157 billion) merger with Paramount for at least two weeks; thus giving states objecting to the agreement more time to try their cases in court. Paramount Skydance fell 2.1 percent.
Overall, the S&P 500 fell 14.41 points to 7,443.28 points. Dow Jones Industrial Average decreased by 307.16 points to 51,839.26 points, and Nasdaq composite index decreased by 12.17 points to 25,508.07 points.
In foreign stock markets, indices in Europe ended mixed.
The moves were sharper in Asia, where South Korea’s Kospi fell 4.5 percent. It has been at the center of major swings in AI stocks, as it is dominated by two technology companies, Samsung Electronics and SK Hynix.
Stocks were stronger in China; Indices rose 2.4 percent in Hong Kong and 0.9 percent in Shanghai.
With AP and Bloomberg
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