Stock markets drop on AI decline
The losses came even though Taiwan Semiconductor Manufacturing Co. reported a stronger profit for the latest quarter
Drops for computer chipmakers and other winners of the artificial-intelligence boom dragged down stock markets worldwide on Thursday.
The S&P 500 dropped 0.5%, even though more stocks rose within the index than fell. The Dow Jones Industrial Average dived 105 points, or 0.2%, and the Nasdaq composite dipped 1.5%.
Nearly three out of every four stocks rose within the S&P 500 after more of the country’s biggest companies reported better earnings for the latest quarter than analysts expected.
Nvidia declined 2.4%, making it the heaviest weight on the index. Other AI winners also dipped, giving back some of their stellar gains.
Micron Technology shed 5.6% to shave its gain for the year so far below 199%. Sandisk dived 12.6% but is nevertheless up 494% for the year so far. Western Digital dipped 9.2% but is still up 171% for the year so far.
The S&P 500 dropped 38.63 points to 7,533.77. The Dow Jones Industrial Average declined 105.67 to 52,552.97, and the Nasdaq composite dipped 387.28 to 25,881.95.
The losses came even though Taiwan Semiconductor Manufacturing Co., a bellwether of the chip industry, reported a stronger profit for the latest quarter than analysts expected. Its stock in Taiwan increased 1.2%, but its stock that trades in the U.S. dropped 2.3%.
In South Korea, drops for AI winners like Samsung Electronics and SK Hynix dragged the Kospi index down 6.4%. It’s been among the world’s shakiest markets in recent weeks because of how dominant the two AI winners are in it.
The day before, the Kospi climbed 6.2%, but it’s had drops of 8.9%, 7.8% and 5.3% in the last couple weeks.
A hike to interest rates by the Bank of Korea also weighed on stocks in Seoul, the first by the bank since 2023.
Higher interest rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments. And worries are rising that central banks around the world may have to raise rates to rein in the effects of expensive oil.
Oil prices are near their highest in a month because of worries that the war with Iran will keep oil tankers out of the Strait of Hormuz and prevent shipments of crude from the Persian Gulf to customers worldwide.
The price for a barrel of Brent crude briefly jumped above $86 per barrel in the morning before erasing the gain and falling back to settle at $84.23, down 0.8% from the day before.
Stock indexes dropped across much of Europe and Asia, including declines of 1.8% in Shanghai and 2.8% in Tokyo.