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Nvidia Drags Wall Street Lower Thursday02/26 15:21
The worst day for Nvidia's stock since last spring dragged the U.S. market
lower on Thursday, even though most stocks on Wall Street rose.
NEW YORK (AP) -- The worst day for Nvidia's stock since last spring dragged
the U.S. market lower on Thursday, even though most stocks on Wall Street rose.
The S&P 500 slipped 0.5% following sharp swings earlier in the week driven
by hopes and worries created by the artificial-intelligence revolution. The Dow
Jones Industrial Average added 17 points, or 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 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 CEO 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 so far. It's been under pressure because of worries that AI-powered
competitors could undercut its business.
Salesforce uses AI itself in its offerings that help customers manage
relationships with their own customers. It also made several announcements that
typically give a stock's price a boost: It will send up to $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 have also seen their stocks come under sudden and aggressive attacks
this year by investors who fear 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% Thursday to trim its loss for the year so
far 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.
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