Drops for stocks in the artificial-intelligence industry are dragging markets down worldwide on Thursday, while oil prices hit their highest levels since May amid the war with Iran.
uncertain
prices → drag → Iran
The S&P 500 sank 1.3 per cent following even sharper losses in Asia, whose markets are full of AI and other technology stocks.
asserted
markets → sink → AI
The Nasdaq composite was down 2.4 per cent, as of 12:56 p.m. Eastern time, but stocks outside of tech did better, and the Dow Jones Industrial Average was down a more modest 40 points, or 0.1 per cent.
asserted
Average → do → tech
AI-related stocks have been shaky on worries that their boom may be under threat because of how expensive it’s become to borrow money to build data centers and buy more AI chips.
uncertain
it → relate → chips
Concerns also remain that stock prices simply shot too high in their yearslong frenzy, even though companies in the industry continue to report growth.
asserted
companies → remain → growth
Lam Research, whose equipment and services help make semiconductors, reported gains in profit and revenue for the summer that were slightly stronger than analysts expected, for example.
asserted
analysts → help → example
Usually, that helps boost a stock’s price, but Lam Research’s tumbled 11.1 per cent.
asserted
Research → help → price
It gave a range for its forecast for profit this quarter whose midpoint was slightly below analysts’ expectations.
asserted
midpoint → give → expectations
Its stock also came into the day with a 52.4 per cent surge for the year so far, nearly quadruple the already healthy gain for the overall S&P 500, leaving plenty of room for potential disappointment.
asserted
stock → come → disappointment
Other big tech stocks were unsettled following their own quarterly reports that included at least some encouraging nuggets.
asserted
that → unsettle → nuggets
Meta Platforms, which is pushing its Muse AI agent, lost 7.4 per cent after reporting stronger revenue for the latest quarter than analysts expected, though its profit fell short.
asserted
profit → push → quarter
The company behind Facebook and Instagram also said it’s creating a new class of stock to raise money to pay for AI investments and other expenses.
asserted
it → say → investments
Tesla slipped 2.1 per cent after flipping between gains and losses in the morning.
asserted
Tesla → slip → morning
It reported a stronger profit for the summer than analysts expected, though its revenue was weaker than forecast.
asserted
revenue → report → summer
The global tide against AI stocks knocked Nvidia down 4.3 per cent.
asserted
tide → knock → Nvidia
Because it’s the largest stock on Wall Street by total value, the chip giant was the heaviest weight on the S&P 500.
asserted
giant → ’ → S&P
CoreWeave, which has borrowed money to buy Nvidia’s AI chips that it rents out to customers over the cloud, has been particularly shaky in recent weeks because of worries about its debt.
asserted
it → borrow → debt
It dropped 9.6 per cent, though it’s swung between wide gains and losses of roughly four per cent within each of the last two days.
asserted
it → drop → days
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The weakness for AI and other tech stocks began in Asia, where South Korea’s Kospi tumbled 3.5 per cent, Hong Kong’s Hang Seng dropped three per cent and Japan’s Nikkei 225 sank 2.7 per cent.
asserted
Nikkei → get → Asia
The Toronto Stock Exchange was down more than one per cent as of publication, with Canadian technology stocks in the red including Celestica by more than 11 per cent, and Shopify by close to four per cent.
asserted
Exchange → include → cent
Also weighing on global stock markets was a jump in oil prices.
asserted
jump → weigh → prices
The price for a barrel of Brent crude oil rose 2.9 per cent to US$111.99 after touching its highest level in five months.
asserted
price → rise → months
It’s at the high end of the $97 to $112 range it’s been yo-yoing through in October on uncertainty about when the war with Iran will allow the global energy industry to return to normal.
asserted
industry → ’ → normal
In Europe, France’s CAC 40 stock index fell to one of the continent’s sharpest losses with a drop of 1.4 per cent.
asserted
index → fall → cent
It has fewer tech stocks than Asian or U.S. indexes, but it was hurt by another jump in yields for French government bonds.
asserted
it → have → bonds
Yields have been generally climbing there because of worries about the government’s big debt load and strained budget.
asserted
Yields → climb → load
Violent protests across France have raised pressure on the government to increase spending, which could add further to its debt.
uncertain
which → raise → debt
Worries about big government debt are weighing on almost every developed economy in the world, including the United States.
asserted
Worries → weigh → States
Such concerns have pushed yields in the U.S. bond market to their highest levels in decades, along with high inflation, signals of a still-strong U.S. economy and other factors.
asserted
concerns → push → economy
But U.S. yields nevertheless fell sharply Thursday in a signal that investors were buying U.S. government bonds in search of something safer to own as AI stocks tumbled.
asserted
stocks → fall → something
The yield on the 10-year Treasury fell to 4.98 per cent from 5.13 per cent late Wednesday and from more than 5.30 per cent earlier this month.
asserted
yield → fall → cent
That’s a major move for the bond market, though the 10-year yield remains well above its 3.97 per cent level from before the war with Iran.
asserted
yield → ’ → Iran
Thursday’s drop in yields came even as another report suggested the U.S. economy may be doing better than economists expected.
uncertain
economists → come → yields
It said fewer U.S. workers applied for unemployment benefits last week, which could signal that layoffs remain low across the country.
uncertain
layoffs → say → country
That solid economy has helped U.S. companies broadly to make bigger profits, which is what propelled the U.S. stock market to a record high earlier this month despite the many worries tugging at it.
asserted
what → help → it
The majority of stocks within the S&P 500 rose on Thursday, only to get drowned out by the drops for more influential tech stocks.
asserted
majority → rise → stocks
Procter & Gamble, Lockheed Martin and CSX were among the latest companies to join the list of those topping profit expectations for the summer, and gains for their stocks helped limit the market’s losses on Thursday.
asserted
gains → join → Thursday
CEO Shailesh Jejurikar said Procter & Gamble expects “geopolitical and economic challenges” to continue, but it stood by its forecasts for growth in revenue, profit and other measures for the full year.
asserted
it → say → year
The stock price for the company behind the Crest, Olay and Oral-B brands rose 6.3 per cent.
asserted
price → rise → brands
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