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Wall Street Recovers Some Losses 06/11 10:06
The U.S. stock market is recovering some of its losses for the week on
Thursday, as the roller coaster for artificial-intelligence companies turns
back upward.
NEW YORK (AP) -- The U.S. stock market is recovering some of its losses for
the week on Thursday, as the roller coaster for artificial-intelligence
companies turns back upward. Oil prices and Treasury yields, meanwhile, remain
near where they were the day before, even though worries are rising about the
war with Iran and accelerating inflation.
The S&P 500 added 0.5%, coming off a back-to-back drop that yanked it back
to where it was in early May. The Dow Jones Industrial Average was up 326
points, or 0.7%, as of 10:30 a.m. Eastern time, and the Nasdaq composite was
0.7% higher.
AI stocks helped lead the market, as they have since last week then they
went from roaring to records to suddenly turning lower. The big concern is
whether such stocks shot too high, too fast because of AI mania, and they've
been careening up and down, sometimes hour by hour.
Marvell Technology climbed 5.5%, for example. It's coming off a manic
stretch where it plunged 16.7%, soared 9.6% and then fell more than 5% for two
straight days. Just before that, it had a one-day surge of 32.5% that was its
best in history when Nvidia CEO Jensen Huang suggested it could be "the next
trillion-dollar company." It was worth a bit more than $190 billion at the time.
Companies in the chipmaking industry jumped to some of the market's biggest
gains. Intel rose 7.8%, and Applied Materials climbed 7.5%.
That helped offset a drop of 11.1% for Oracle. It reported a stronger profit
for the latest quarter than analysts expected, but it also said it expects to
raise $40 billion in cash this fiscal year through borrowing and sales of its
stock. That comes after it raised $48 billion last fiscal year to help pay for
AI investments.
Other companies' stocks have also been punished recently for announcing
heavy spending on AI, as the question remains whether all the investment can
produce the kinds of profits and productivity that AI proponents are promising.
Oil prices, meanwhile, drifted following the latest fighting in the war with
Iran, which has hurt the flow of oil deliveries from the Persian Gulf.
President Donald Trump threatened to launch major strikes on Iran and seize
control of its oil and gas industries.
The United States and Iran have launched attacks over the past several days
after a more than monthlong tenuous ceasefire. While the strikes have escalated
tensions in the region, they have been more limited compared to the early weeks
of the war and talks aimed at extending the ceasefire are ongoing.
Brent crude oil, the international standard, fell 0.5% to $92.64 per barrel.
U.S. benchmark crude oil added 0.3% to $90.29 per barrel.
High oil prices have sent inflation painfully upward, and a report on
Thursday showed that prices at the U.S. wholesale level increased by more in
May than economists expected. The effect is worldwide, and the European Central
Bank on Thursday became the first major central bank to raise interest rates in
response.
Higher rates can keep a lid on inflation. But they also simultaneously slow
entire economies and undercut prices for all kinds of investments, including
stocks and cryptocurrencies. They hit investments seen as the most expensive in
particular, and some critics are calling AI a bubble where investment inflated
too far.
The Federal Reserve will make its own decision on interest rates next week
under its new chair, Kevin Warsh. He was appointed by Trump, who has been
pushing for lower interest rates. But the widespread expectation is that the
Fed will keep its main interest rate steady next week.
If anything, traders see the Fed as more likely to raise rates at least once
by the end of the year, according to data from CME Group.
The yield on the 10-year Treasury eased to 4.52% from 4.55% late Wednesday.
In stock markets abroad, indexes rose modestly in Europe following a mixed
finish in Asia.
London's FTSE 100 rose 0.9%, and Hong Kong's Hang Seng fell 0.7% for two of
the world's bigger moves.
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