The worst day for Nvidia’s stock since last spring dragged the U.S. market lower even though most stocks rose
The worst day for Nvidia’s stock since last spring dragged the U.S. market lower Thursday even though most stocks on Wall Street rose. The Standard & Poor's 500 index slipped 0.5% after sharp swings earlier in the week, driven by hopes and worries created by the artificial intelligence revolution.
The Dow Jones industrial average added less than 0.1%, and the Nasdaq composite sank 1.2%. Nvidia, whose chips are helping to power the AI boom, reported another stellar quarter of profit growth that breezed past analysts’ expectations. It also gave a forecast for revenue in the current quarter that once again topped Wall Street’s estimates. But such blowout performances have become so typical for Nvidia that they’re losing their oomph. Its stock sank 5.5% for its worst loss since April. “Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” Nvidia Chief Executive Jensen Huang said. Worries are nevertheless rising that those customers may eventually curtail their spending on Nvidia’s chips and other AI investments amid doubts about whether they can make back their billions of dollars through future gains in productivity. Because Nvidia’s is the largest stock in the U.S. market by value, it has more influence on the S&P 500 than any other. It alone accounted for more than four-fifths of the S&P 500’s loss. Despite Nvidia’s troubles, seven stocks rose in the S&P 500 for every three that fell. Among them was Salesforce, which climbed 4% after it likewise reported a stronger profit for the latest quarter than analysts expected. It’s a return to gains for the stock, which is still down nearly 25% for the young year. It’s been under pressure because of worries that AI-powered competitors could undercut its business. Salesforce uses AI in its offerings that help clients manage relationships with their own customers. It also made several announcements that typically give a stock’s price a boost: It will send as much as $50 billion to shareholders through buybacks of its stock, and it increased its dividend. “Agentic AI is a tailwind for our business,” CEO Marc Benioff said. Companies in industries as far flung as trucking logistics and financial services also have seen their stocks come under sudden and aggressive attacks this year by investors who fear that their businesses may lose out to AI or even become obsolete. The sharpest swings have hit software companies, and a widely followed ETF that tracks the industry rose 2.1% on Thursday to trim its loss for the year below 22%. Elsewhere on Wall Street, Warner Bros. Discovery shares edged down 0.3% after the entertainment giant reported a $252 million loss for the fourth quarter. That didn’t seem to bother investors, who are likely more interested in which acquisition offer — Netflix or Paramount Skydance — the company and its shareholders ultimately accept. All told, the S&P 500 fell 37.27 points to 6,908.86. The Dow Jones Industrial Average added 17.05 to 49,499.20, and the Nasdaq composite sank 273.69 to 22,878.38. Some of the sharpest swings in financial markets were for oil, where prices swung sharply as the United States and Iran held indirect talks about Iran’s nuclear program. A peaceful solution would remove the threat of war, which investors worry could block the global flow of oil and drive up its price. The U.S. military has already built up the largest force of American warships and aircraft in the Middle East in decades, which has raised the stakes. The current round of talks feels “make or break,” according to strategists at Macquarie. A barrel of benchmark U.S. crude briefly fell as low as $63.60. But it erased that loss and rose above $66.50 before settling at $65.21, up 0.3%. Brent crude, the international standard, also had a zigzag day and finished at $70.75 per barrel, down 0.1%. In stock markets abroad, indexes rose modestly in Europe following a mixed finish in Asia. South Korea’s Kospi leaped 3.7% to another record, driven by gains for tech-related stocks. It’s already surged nearly 50% since the turn of the year. Hong Kong’s Hang Seng, meanwhile, lost 1.4%. In the bond market, Treasury yields eased. The yield on the 10-year Treasury fell to 4.01% from 4.05% late Wednesday. A report showed that the number of U.S. workers applying for unemployment benefits ticked up last week, but not by any more than economists expected. It also remains relatively low compared with history. Choe writes for the Associated Press.
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