More drops for Nvidia and other AI chip stocks erase Wall Street's rally from the day before
NEW YORK (AP) — More drops for AI chip stocks are dragging the U.S. market lower, even as much of Wall Street rises following strong profit reports from AppLovin, Tapestry and other companies. The S&P 500 fell 1.8% Thursday and erased all of its gain from the prior day, which was its best in three months. The Dow Jones Industrial Average dropped 403 points, and the Nasdaq composite fell 3%. AI-related stocks worldwide felt pressure from worries that Tuesday’s U.S. elections could mean moratoriums for data centers in some areas, and South Korea’s Kospi index tumbled 5.3%. In other markets, though, the initial knee-jerk reaction to the midterms faded. Oil prices recovered some of their sharp slides.
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NEW YORK (AP) — More drops for AI chip stocks are dragging the U.S. market lower on Thursday, even as the majority of Wall Street rises following strong profit reports from AppLovin, Tapestry and other companies.
The S&P 500 fell 1.2% in early trading, coming off its best day in three months. The Dow Jones Industrial Average was down 165 points, or 0.3%, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 2.4% lower.
Stock markets worldwide felt pressure from continued drops for companies in the artificial-intelligence industry, and South Korea’s Kospi index tumbled 5.3%. Such stocks have been swinging for months on worries that the build out of further AI data centers may slow because of how expensive it’s become to borrow money.
Tuesday’s U.S. midterm elections added another challenge. The nationwide victories by Democrats raised the possibility that governments could force pauses in construction of more data centers.
Nvidia fell 4.1% and was the heaviest weight on the S&P 500, a day after dropping 3.2%. Advanced Micro Devices tumbled 10.7%. CoreWeave, a company that rents access to AI chips to customers over the cloud, fell 6.8%.
In other markets, though, the initial knee-jerk reaction to the midterm results faded. The price of a barrel of Brent crude oil rose 2.3% to $96.76 and recovered a chunk of its nearly 9% drop from the day before. Uncertainty still reigns about what will happen in the war with Iran and when the global energy industry can return to normal.
The rise in oil prices helped Treasury yields hold a bit steadier a day after falling in the bond market. The yield on the 10-year Treasury edged down to 4.89% from 4.90% late Wednesday. It had been at 4.95% on election night and above 5.30% last month.
Helping to support Treasury yields was a report suggesting layoffs remain limited across the country. Fewer U.S. workers applied for unemployment benefits last week. A separate report, meanwhile, suggested overall productivity for U.S. workers improved by more during the summer than economists expected. That could help the economy grow without adding pressure to the nation’s high inflation.
And thrumming in the background of Wall Street, companies continue to report stronger profits for the summer than analysts expected. Stock prices tend to follow where corporate profits and interest rates go over the long term, depending on them much more than on who controls what in Washington.
AppLovin soared 29.9% after the marketing platform reported both revenue and profit that topped analysts’ expectations. It also approved a program to send up to $3.2 billion to its investors by buying back its own stock, bringing the program’s total potential value to $3.6 billion.
Tapestry rallied 9.8% after the company behind the Coach and Kate Spade brands likewise delivered a stronger profit than expected. It also raised its forecasts for revenue and earnings this fiscal year.
They helped lead gains for the majority of stocks within the S&P 500.
In stock markets abroad, indexes rose in Europe following a mixed finish in Asia. London’s FTSE 100 rose 0.6% as the Bank of England increased its main interest rate for the first time in three years to help limit high inflation.
The bank said its next moves on interest rates largely hinge on what happens with the Iran war, which sent oil prices and inflation higher worldwide.
“We’ve seen encouraging news in the past 48 hours,” Bank Gov. Andrew Bailey said at a press briefing. “The best thing that can happen is to resolve the conflict in the Middle East; there’s no question about it.”
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AP Business Writer Elaine Kurtenbach contributed to this report.
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