The recent fluctuations in AI-related stocks have returned, affecting Wall Street negatively. On Tuesday, the S&P 500 decreased by 0.4%, despite most of its constituent stocks showing gains. The Nasdaq composite faced a larger decline of 1.2%, and the Dow Jones Industrial Average fell by 130 points, equivalent to a 0.2% decrease from its previous record.
This decline originated in Asia, with Samsung Electronics experiencing a 6.9% drop in Seoul. The company released an early report showcasing strong second-quarter performance, with an expected operating profit increase of approximately 1,800% compared to last year. Though analysts found these figures impressive, they were insufficient for investors who had seen Samsung’s stock more than double earlier this year.
AI stocks on Wall Street have faced similar pressures recently. Concerns arise from fears that stock prices have climbed too quickly and that AI may not generate enough productivity and profit to justify extensive investments in semiconductor chips and data centers. Notable declines include Advanced Micro Devices down 6.5%, Intel down 9.7%, and Micron Technology down 4.7%.
Additional market influences included SpaceX’s 6.8% fall following its inclusion in the Nasdaq 100 index. In non-tech sectors, Vertex Pharmaceuticals declined by 1.4% after agreeing to acquire Crinetics Pharmaceuticals for $85 per share. As a result, Crinetics’ shares saw a 98.7% increase. Rivian Automotive’s stock dropped 18.1% after announcing its sale of 75 million shares, diluting existing shareholders’ equity.
Overall, the S&P 500 fell 33.58 points to 7,503.85. The Dow Jones Industrial Average declined 130.76 points to 52,925.15, while the Nasdaq composite decreased by 302.47 points to 25,818.69.
Market pressures were also influenced by rising oil prices. This occurred after the British military reported projectile attacks on three tankers in the Strait of Hormuz. Subsequently, the U.S. revoked a license permitting the sale of Iranian oil, impacting hopes for resuming unhindered oil transport from the Persian Gulf. Brent crude oil, the global benchmark, increased by 3% to reach $74.16 per barrel.
Higher oil prices contribute to inflationary pressures, leading to growth in Treasury yields. The yield on the 10-year Treasury note rose to 4.54% from 4.48% the previous Monday, up from 3.97% at the onset of the U.S.-Iran conflict. Elevated yields have unsettled investors, particularly after oil prices exceeded $100 per barrel in March due to the conflict. Elevated inflation could compel the Federal Reserve and other central banks to increase interest rates. While higher rates help manage inflation, they can also slow economic growth and negatively affect investment values.
In global stock markets, South Korea’s Kospi Index dropped 4.9% as Samsung Electronics represents over a quarter of the index. Japan’s Nikkei 225 lost 2.1%, and Germany’s DAX saw a 1.4% decline, indicating significant global market shifts.
Contributions from AP Business Writers Matt Ott and Elaine Kurtenbach are acknowledged.