Most U.S. stocks experienced gains on Thursday, with the Dow Jones Industrial Average reaching a new record high. However, computer chip companies and other AI-related stocks faced declines, leading to mixed index results.
Index Performances
The S&P 500 ended the day nearly unchanged, edging up by less than 0.1%, despite rising stock values for seven out of ten stocks within the index. The Dow climbed 594 points, equivalent to a 1.1% increase, while the Nasdaq composite fell by 0.8% after losing an early gain.
Employment Report and Inflation
A report indicated that U.S. employers added 57,000 jobs in June, less than expected and a slow down from May’s pace. This weaker job growth might keep inflation in check, which had been escalating due to oil price hikes caused by conflict in Iran. If inflation eases, the Federal Reserve might refrain from raising interest rates, offering relief to investors. Lower rates generally boost economic activity by reducing borrowing costs for households and businesses, which can also lead to higher stock and investment prices.
Federal Reserve and Interest Rates
The yield on the 10-year Treasury rose to 4.50% in the morning but fell to 4.46% after the jobs report and stabilized at 4.48%. Traders now see an 82% chance that the Federal Reserve, led by new chairman Kevin Warsh, will not raise the federal funds rate in the next meeting, up from 71% previously.
“The labor market isn’t overheating,” stated Brian Jacobsen, chief economic strategist at Annex Wealth Management. This could allow the Fed to delay any rate changes during the summer.
Wall Street Movements
On Wall Street, National Beverage, the company behind LaCroix, surged 7.5% after announcing a special dividend. Dollar Tree gained 2.4% following its stock buyback program approval. Bitcoin’s 2% price rise boosted cryptocurrency-related stocks, with Robinhood Markets and Coinbase Global rising by 3.8% and 3.9% respectively.
Challenges in the Tech Sector
Tech stocks, primarily computer chip companies, faced declines due to concerns over inflated stock prices from the AI boom. Micron Technology slid 5.5% after a previous 10.6% drop. Nvidia and Lam Research fell by 1.4% and 10.2% respectively, impacting the S&P 500 due to their market size.
Overall, the S&P 500 slightly increased to 7,483.24 points. The Dow jumped to 52,900.07, while the Nasdaq composite decreased to 25,382.67.
International Market Reactions
In global markets, chip company losses significantly affected several Asian indexes. South Korea’s Kospi index fell by 7.9%, marking its steepest drop since a 10% decline the previous week. Tokyo and Shanghai indexes decreased by 2.5% and 2% respectively. Conversely, European markets saw gains, with France’s CAC 40 rising by 1.7%.
Oil Market Trends
Oil prices decreased in the morning before recovering later. Brent crude, the international benchmark, rose to $71.80 per barrel, marking a 0.3% increase.
AP Business Writers Chan Ho-him and Matt Ott contributed insights to this report.