Stan Choe
Updated ,first published
More drops for AI stocks weighed on the US market overnight, sending Wall Street to its fourth straight loss.
The S&P 500 fell 1.2 per cent for its worst day in nearly a month, though it’s still not far from its all-time high set last week. The Dow Jones Industrial Average dipped 228 points, or 0.5 per cent, and the Nasdaq composite dropped 1.8 per cent.
The Australian sharemarket is set to follow Wall Street’s negative lead, with ASX futures down 14 points, or 0.2 per cent, to 8547. The ASX slid by 0.2 per cent on Wednesday for its third-straight losing session. The Australian dollar was 0.4 per cent lower at US66.04¢ at 8.36am AEDT.
Slightly more stocks rose within the S&P 500 than fell, but they got drowned out by the drops for companies in the artificial-intelligence industry.
Questions continue to dog the former superstars about whether their years-long dominance of Wall Street meant their prices shot too high, as well as whether all the investment in AI will produce enough profit and productivity to prove worth the cost. Worries are also rising about the debt that some companies are taking on to pay for it all.
Broadcom dropped 4.5 per cent, Oracle fell 5.4 per cent and CoreWeave sank 7.1 per cent. Nvidia, the chip company that’s become Wall Street’s most influential stock because of its tremendous size, fell 3.8 per cent and was the day’s heaviest weight on the S&P 500.
Power companies that jumped earlier in the year on expectations for stronger demand from electricity-sucking data centres also lost some of their shine. Constellation Energy fell 6.7 per cent.
Also on the losing end of Wall Street was Lennar, which sank 4.5 per cent following a mixed profit report. The homebuilder delivered a weaker profit for the latest quarter than analysts expected, though its revenue topped expectations.
Executive Chairman Stuart Miller said that conditions remain challenging, with customers feeling less confident while looking for discounts and more affordable options. As a result, the company gave limited forecasts for its upcoming financial performance.
Progressive, meanwhile, fell 2 per cent after the insurer based in Mayfield Village, Ohio, said that its net income for November fell 5 per cent from its year-ago level.
On the winning side of Wall Street were oil companies, after President Donald Trump ordered a blockade of all “sanctioned oil tankers” into Venezuela. It’s Trump’s latest escalation in pressure on Venezuela, which may be sitting on more oil than any other country.
That sent the price of a barrel of benchmark US crude higher by 1.7 per cent to $US56.06, just a day after it sank to its lowest level since 2021. Brent crude, the international standard, climbed 1.7 per cent to $US59.90 per barrel.
That in turn helped ConocoPhillips rise 4.6 per cent and cut into its loss for the year so far, which came into the day at 8.5 per cent. Devon Energy rallied 5.3 per cent, and Halliburton added 2 per cent. Oil prices had dropped through most of this year on expectations that companies are pumping more than enough crude to meet the world’s demand.
Netflix edged up 0.2 per cent after Warner Bros. Discovery’s board said it still recommends shareholders approve a buyout offer for its Warner Bros business from the streaming giant, rather than a competing hostile bid from Paramount Skydance for the entire company.
Warner Bros Discovery slipped 2.4 per cent, while Paramount Skydance fell 5.4 per cent.
In the bond market, Treasury yields held relatively steady ahead of a report coming on Thursday that will show how bad inflation has been for US consumers.
The yield on the 10-year Treasury held at 4.15 per cent, where it was late on Tuesday.
In other international markets, indexes were mixed in Europe following a stronger finish in Asia.
South Korea’s Kospi leaped 1.4 per cent for one of the world’s bigger gains and shaved its loss for the week so far down to 2.7 per cent.
AP
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