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Financial Markets 07/07 15:12
NEW YORK (AP) -- The roller-coaster ride for AI stocks snapped lower again
and weighed on Wall Street. The S&P 500 fell 0.4% Tuesday, even though the
majority of stocks within the index rose. The drops for stocks in the
artificial-intelligence industry dragged the Nasdaq composite down 1.2%, while
the Dow Jones Industrial Average dipped 0.2%. The weakness began in Asia, where
Samsung Electronics tumbled 6.9% in Seoul despite offering what analysts called
a strong forecast for upcoming results. AI stocks worldwide have been under
pressure because of worries their prices shot too high. Stocks also felt
pressure from rising oil prices.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.
NEW YORK (AP) -- The roller-coaster ride for AI stocks is snapping lower
again Tuesday and weighing on Wall Street.
The S&P 500 fell 0.3% even though the majority of stocks within the index
rose. The drops for stocks in the artificial-intelligence industry dragged the
Nasdaq down 0.6%, as of 2:14 p.m. Eastern time, while the Dow Jones Industrial
Average was down 153 points, or 0.3%.
The weakness began in Asia, where Samsung Electronics tumbled 6.9% in Seoul.
The tech giant gave a preliminary look at its performance for the second
quarter, and the numbers were strong. Samsung Electronics said it expects to
say its operating profit surged roughly 1,800% from a year earlier.
Analysts called the numbers surprisingly good, but they still weren't enough
for investors after its stock came into the day having well more than doubled
in the year so far.
On Wall Street, AI stocks have been under similar pressure in recent weeks
on worries that their prices shot too high and that AI may not produce enough
productivity and profits to make all the investments in chips and data centers
worth it.
Micron Technology fell 5% and was the heaviest weight on the S&P 500. Intel
sank 9.1% and also weighed heavily on the market. Nvidia, which is the largest
stock on Wall Street by value because of the AI boom, rose 1.1% after slipping
earlier in trading. That helped ease some pressure on the broader market.
SpaceX, which owns the xAI business, fell 5.2% in its first trading after
getting included in the Nasdaq 100 index.
Outside of tech, Vertex Pharmaceuticals fell 1% after saying it agreed to
buy Crinetics Pharmaceuticals for $85 per share in cash. Crinetics, which
develops therapeutics for endocrine diseases, soared 98.8%.
Rivian Automotive dropped 15.1% after the electric vehicle company said it's
selling 75 million shares of its stock, which dilutes the ownership stakes of
earlier shareholders.
Stocks also felt pressure from a rise in oil prices after the British
military said three tankers were struck by projectiles in the Strait of Hormuz.
That hurt hopes that the war in Iran may be winding down and that the Strait of
Hormuz may fully reopen to oil tankers carrying crude to customers worldwide
from the Persian Gulf.
Brent crude, the international standard, rose 2.9% to $74.11.
Higher oil prices put upward pressure on inflation, and Treasury yields
climbed in the bond market. The yield on the 10-year Treasury rose to 4.52%
from 4.48%
High yields worldwide have been rattling investors after oil prices burst
above $100 per barrel earlier in the summer because of the war. The worry is
that high inflation may force the Federal Reserve and other central banks to
hike interest rates. High rates can keep a lid on inflation, but they also slow
the economy and hurt prices for all kinds of investments.
In stock markets abroad, South Korea's Kospi tumbled 4.9% because Samsung
Electronics alone makes up more than a quarter of the index.
Japan's Nikkei 225 fell 2.1%, and Germany's DAX lost 1.4% for two of the
world's bigger moves.
___
AP Business Writers Matt Ott and Elaine Kurtenbach contributed to this
report.
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