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Financial Markets 06/04 15:24
NEW YORK (AP) -- Wall Street rallied Thursday after falling oil prices and
yields in the bond market eased the pressure on U.S. stocks. Banks, small
companies and other stocks that had earlier been left behind by the euphoria
around artificial-intelligence technology led the way.
The S&P 500 rose 0.4% for its 10th gain in the last 11 days, a day after
dropping from its all-time high. The Dow Jones Industrial Average soared 874
points, or 1.7%, to a record, and the Nasdaq composite slipped 0.1%.
Stocks got a lift from a 2.8% drop for the price of Brent crude oil to
$95.03 per barrel. That gave back a chunk of its rise from this week caused by
the latest flare-ups of fighting between Iran and the United States and its
allies.
The expectation on Wall Street seems to be that the United States and Iran
will ultimately agree to reopen the Strait of Hormuz to oil tankers. That would
hopefully improve the flow of crude, lower oil's price and remove some of the
upward pressure on inflation that's hurting the world. Such hopes, along with
strong profit reports from U.S. companies, helped launch the S&P 500 on a
nine-day winning streak that ended Wednesday, a day short of its longest run in
three decades.
Stocks of smaller companies helped lead the way, and the Russell 2000 index
of the smallest U.S. stocks jumped 1.4%. They can reap the biggest benefits of
falling interest rates, and the yield on the 10-year Treasury dipped to 4.47%
from 4.49% late Wednesday as oil prices sank.
Lower yields can make it less expensive for companies to borrow cash, which
many smaller companies need to do to grow.
Banks also helped lead the market, including gains of 5% for Goldman Sachs,
4.7% for Fifth Third Bancorp and 4.4% for U.S. Bancorp.
They helped to more than make up for losses by some AI stocks, which took a
sudden back seat after dominating the market.
Broadcom sank 12.6%, even though both profit and revenue for the chip
company surpassed analysts' expectations. CEO Hock Tan said its AI
semiconductor revenue more than doubled to $10.8 billion during the quarter and
that demand is only getting bigger. He is forecasting AI semiconductor growth
to top 200% in the current quarter.
Investors, though, may have wanted even more after Broadcom's stock came
into the day with a 38.5% surge for the year so far. That towered over the
already strong 10.3% rise for the S&P 500 index, and Broadcom has grown to
become one of Wall Street's largest and most influential stocks.
Analysts have been saying AI stocks may have run too high, becoming too
expensive, and that the broad U.S. stock market may be set for a slowdown
following an unrelenting streak of nine straight winning weeks for the S&P 500,
its longest since 2023.
Other AI winners likewise gave back some of their big gains. Micron
Technology, the latest company to see its total value top $1 trillion because
of AI euphoria, fell 7.7%.
CrowdStrike Holdings dropped 3.8% even though the cybersecurity company's
profit and revenue for the latest quarter topped analysts' expectations. CEO
George Kurtz said the latest quarter was when "the worlds of cybersecurity and
frontier AI collided," and the company said it's splitting its stock to make
its share price more affordable.
But its stock came into the day with a 59.5% surge for the year so far. And
analysts said it beat forecasts for some financial measures by less than it
usually does.
Outside of tech, PVH Corp., the company behind the Calvin Klein and Tommy
Hilfiger brands, tumbled 20.2% even though it also beat Wall Street's
first-quarter sales and profit targets. CEO Stefan Larsson warned that it's
feeling "the prolonged effects of the Middle East conflict, which is putting
pressure on" customers in the region.
All told, the S&P 500 climbed 30.63 points to 7,584.31. The Dow Jones
Industrial Average jumped 874.86 to 51,561.93, and the Nasdaq composite slipped
23.02 to 26,830.96.
Reports on the U.S. economy, meanwhile, came in mixed. One said that
slightly more U.S. workers applied for unemployment benefits last week, which
could indicate a slowdown in the relatively solid U.S. job market.
In stock markets abroad, indexes rose in Europe following a weaker finish in
Asia.
South Korea's Kospi fell 1.8%, Hong Kong's Hang Seng dropped 1.5% and
Japan's Nikkei 225 fell 1.4% for some of the larger losses.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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