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Financial Markets 05/19 15:33
NEW YORK (AP) -- The U.S. stock market gave back more of its record-setting
rally Tuesday after bond markets rattled by high inflation cranked up the
pressure.
The S&P 500 fell 0.7% for its third straight loss since setting its latest
all-time high. The Dow Jones Industrial Average dropped 322 points, or 0.6%,
and the Nasdaq composite sank 0.8%.
The declines followed mixed moves for stock markets abroad, while oil prices
eased in their latest yo-yo move. Falling technology stocks in Asia dragged
South Korea's Kospi down 3.3%, but Germany's DAX returned 0.4%.
Tech stocks are faltering following huge runs made because of excitement
around artificial-intelligence technology, runs that critics said made them too
expensive. The stumble comes as oil prices swing on uncertainty about how long
the Iran war will keep the Strait of Hormuz closed for oil tankers. That in
turn has pushed yields higher in bond markets, which is dragging on economies
and pressuring all kinds of other investments.
The wait is on, meanwhile, for Nvidia to report its latest quarterly
results. The chip company is due to report on Wednesday, and it's routinely
blown past analysts' expectations each quarter. Not only that, it's provided
forecasts for future growth that have consistently topped Wall Street's.
How it does could determine whether technology stocks and the larger U.S.
stock market can maintain their rally. Nvidia fell 0.8% Tuesday and was one of
the heaviest weights on the S&P 500 because of its immense size.
"Every flow has its ebb," Rex Feng, Venu Krishna and other strategists at
Barclays Capital wrote in a report. They said investors have been pumping more
money than usual into U.S. stock funds, which helped fuel "the fastest rebound
in decades; now the pendulum could swing backwards."
Akamai Technologies dropped 6.3% for one of Wall Street's sharper losses
after the cybersecurity and cloud computing company said it wants to raise $2.6
billion through a convertible note offering.
Home Depot rose 0.9% after flipping an early loss following its latest
earnings report. Its profit and revenue edged past analysts' expectations, but
an important measure for retailers that looks at performance for stores more
than 1 year old came in below some analysts' expectations.
CEO Ted Decker said Home Depot saw similar demand from its customers as it
did throughout last year "despite greater consumer uncertainty and housing
affordability pressure."
So far, many big U.S. companies have been reporting stronger-than-expected
profits for the latest quarter thanks in part to their customers continuing to
spend in the face of high gasoline prices and other challenges. That's helped
vault U.S. stock indexes to records, but disquiet in the bond market is
threatening that.
In the bond market, Treasury yields climbed further. The yield on the
10-year Treasury rose to 4.66% from 4.61% late Monday and from less than 4%
before the war with Iran began. That's a notable increase, and it's part of a
worldwide climb that's making stock prices look even more expensive and
threatening to slow the economy.
Higher yields can drive up rates for mortgages and loans going to companies
to build AI data centers, which has been a big source of growth for the economy.
Yields rose even as oil prices eased. The price for a barrel of Brent crude
slipped 0.7% to settle at $111.28, though it's still well above its $70 level
from before the war with Iran.
The average price for a gallon of gasoline rose again overnight to $4.53,
according to the AAA motor club, or about 43% more than it cost last year at
this time.
All told, the S&P 500 fell 49.44 points to 7,353.61. The Dow Jones
Industrial Average dropped 322.24 to 49,363.88, and the Nasdaq composite sank
220.02 to 25,870.71.
In stock markets abroad, London's FTSE 100 edged up 0.1% despite a 2.2% drop
for Standard Chartered. The bank said Tuesday it plans to reduce over 7,800
roles as it steps up artificial intelligence and automation uses. It's the
latest big company to cite AI as one of the reasons for cutting jobs.
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AP Business Writers Yuri Kageyama, Matt Ott and Chan Ho-him contributed to
this report.
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