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Wall Street Drifts Monday 07/20 15:23
Wall Street drifted to a quiet finish Monday after stocks of chipmakers and
other winners of the artificial-intelligence boom trimmed some of their recent
losses.
NEW YORK (AP) -- Wall Street drifted to a quiet finish Monday after stocks
of chipmakers and other winners of the artificial-intelligence boom trimmed
some of their recent losses.
The S&P 500 dipped 0.2%, coming off its first losing week in the last three
and just its third since the end of March. The Dow Jones Industrial Average
dropped 307 points, or 0.6%, and the Nasdaq composite was basically flat after
slipping by less than 0.1%.
Nvidia added 0.2% and held firmer following its drop on Friday, when it was
the heaviest weight on the S&P 500. Sandisk climbed 2.7% after tumbling 29%
last week.
Advanced Micro Devices rose 1.6% after announcing an expanded partnership
where Microsoft will use its products for AI, including its new Helios product
starting in the second half of the year.
Such stocks have been under pressure for weeks on worries that their prices
shot too high in the euphoria around AI. On one hand, companies are making
billions of dollars in revenue as customers pour money into AI chips and data
centers. But all that spending may fizzle out if AI doesn't produce as much
profit and productivity as promised.
Wall Street may get some hints on that soon as some of the biggest spenders
on AI report their latest quarterly results. On Wednesday, Alphabet will tell
investors how much it made during the spring and give updates on its AI efforts.
All kinds of companies are under pressure to report strong growth in profit
for the spring. They will need to in order to justify the big moves their stock
prices have made. Indexes are near their records, even with the recent
shakiness for AI stocks.
AMC Entertainment jumped 26.8% after the movie-theater operator reported
stronger revenue for the latest quarter than analysts expected. It also said
some of its theaters in Los Angeles and other cities ran "The Odyssey" for more
than 85 straight hours from Thursday through Sunday to meet demand.
Domino's Pizza climbed 2.1% after delivering stronger revenue for the spring
than expected. CEO Russell Weiner said the company saw growth in orders for
both its carryout and delivery businesses, even with the broad industry
continuing "to face pressure on consumer demand."
Another restaurant chain, Jersey Mike's, is beginning its roadshow to raise
interest in its stock, which it's planning to sell on the New York Stock
Exchange for between $21 and $25 per share in an initial public offering.
It and other businesses are facing pressure in selling to U.S. households
feeling crunched by still-high inflation, thanks in large part to high gasoline
prices. The average cost for a gallon of gasoline in the United States has
gotten back above $4 because of higher crude oil prices.
After dropping below $72 early this month, roughly back to where it was
before the war with Iran began, the price for a barrel of Brent crude has been
jumping recently as fighting continues in the Middle East.
On Monday, the price swung between roughly $86 and $91 before settling at
$89.22, up 1.3%.
The war with Iran is keeping oil tankers from using the Strait of Hormuz to
deliver crude from the Persian Gulf to customers, which pushes up oil's price.
S&P Global counted only 127 vessels crossing the strait during the week through
Sunday, down nearly 50% from the week before.
Worries about expensive oil and high inflation have sent Treasury yields
higher in the bond market, which threaten to slow the economy and undercut
prices for stocks and other investments.
The yield on the 10-year Treasury climbed to 4.59% from 4.55% late Friday
and from just 3.97% before the war with Iran. Higher yields have already sent
the average 30-year mortgage rate to its highest level in nearly a year.
The higher yields weighed on the broad U.S. stock market, and the majority
of stocks fell on Wall Street.
A 3.8% drop for Warner Bros. Discovery also helped erase a gain for the S&P
500 early in the day. A federal judge ordered it and Paramount to halt their
$81 billion merger for at least two weeks, allowing states that are challenging
the deal more time to see their case through in court.
All told, the S&P 500 fell 14.41 points to 7,443.28. The Dow Jones
Industrial Average dropped 307.16 to 51,839.26, and the Nasdaq composite
slipped 12.17 to 25,508.07.
In stock markets abroad, indexes ended mixed in Europe.
The moves were sharper in Asia, where South Korea's Kospi fell 4.5%. It's
been at the center of the huge swings for AI stocks because it's dominated by
two tech companies, Samsung Electronics and SK Hynix.
Stocks were stronger in China, where indexes rose 2.4% in Hong Kong and 0.9%
in Shanghai.
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