On Tuesday, Wall Street faced abrupt changes, particularly due to AI stocks. The S&P 500 experienced fluctuations, initially rising by 1% before dropping by 2.3% at midday, and ended with a decline of 0.3%. This added to the distance from its peak a week earlier. The Dow Jones Industrial Average gained 86 points or 0.2%, while the Nasdaq composite decreased by 1%.
Shares in companies such as Micron Technology significantly influenced market swings. Micron saw a jump of 4% turn into a 10% drop before closing with a 1.4% decrease. After earlier surges of 9.9% and a fall of 13.3%, concerns grew over Micron’s rapid stock tripling this year. The debate continues whether AI stocks will face a long downturn or if recent volatility serves to adjust rampant optimism.
Other AI-related stocks like Marvell Technology and Advanced Micro Devices faced losses, 7.6% and 3% respectively, after initial gains evaporated.
Amid these market shifts, notable AI firms are seeking to list their stocks on U.S. exchanges. OpenAI, known for creating ChatGPT, has filed paperwork for a potential initial public offering. SpaceX might launch its IPO soon as well.
The volatility in AI stocks overshadowed a decrease in oil prices, which seemed to ease stock market pressure. Most of the S&P 500 rose as Brent crude oil prices decreased by 3% to $91.45 per barrel. Oil price instability relates to the potential reopening of the Strait of Hormuz to enable crude transport from the Persian Gulf globally. However, tensions increased when President Donald Trump accused Iran of downing a U.S. helicopter, escalating conflict concerns.
War-induced high oil prices have already fueled inflation, affecting U.S. consumers and global bond yields, which in turn pressure stock values. Treasury yields fell on Tuesday to 4.52% from the previous 4.56% but remain elevated since prior to the Iran conflict.
U.S. inflation reports are imminent, highlighting consumer and wholesale prices due later in the week. Given the current inflation and strong job market, traders predict the Federal Reserve may raise interest rates this year to control inflation, though it could slow economic growth.
High borrowing costs may discourage expansion, including building AI data centers. A decline in oil prices has bolstered airline stock gains, with American Airlines and Delta Air Lines rising by 3.6% and 3.8% respectively.
J.M. Smucker’s impressive quarterly profit, thanks to increased coffee and bakery product prices, led its shares to jump 10.4%. Nuvalent’s stocks surged 39.3% after GSK agreed on a $10.6 billion acquisition, reflecting unanticipated profits from U.S. companies enhancing the S&P 500 this year.
The S&P 500 ended Tuesday down 19.08 points at 7,386.65. The Dow increased by 86.10 to 50,872.11, while the Nasdaq fell by 250.84 to 25,678.82. International stock indexes saw declines in Europe and larger movements in Asia, with South Korea’s Kospi rebounding by 8.2% after an earlier 8.3% drop, influenced by tech giants like SK Hynix and Samsung Electronics.
Report contributors: Matt Ott and Elaine Kurtenbach, AP Business Writers.
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