NEW YORK (AP) — U.S. stock markets concluded Wednesday’s trading session with mixed results, as prominent tech stocks, including Nvidia and Palantir, managed to recover significantly from their earlier losses.
The S&P 500 experienced a fractional decline of 0.2%, reversing a more severe drop of 1.1% earlier in the day, yet it remained close to its historically high levels achieved last week. The Dow Jones Industrial Average saw a minor uptick, gaining 16 points, or less than 0.1%. Conversely, the Nasdaq composite fell by 0.7%.
The day’s market movements were once again dominated by stocks involved in the burgeoning field of artificial intelligence.
Initially, Nvidia, a key player in AI technology, saw its stock values plummet by as much as 3.9% during morning trade, positioning it as a considerable drag on the market following a 3.5% decline the previous day.
Nevertheless, Nvidia recuperated almost all of its Wednesday losses, ultimately closing down by a mere 0.1%. This recovery positively influenced the broader market indices, given Nvidia’s status as the most significant stock on Wall Street due to its considerable market capitalization.
Palantir Technologies, another favored company in the AI sector, experienced a 1.1% decline, compounding its previous day’s loss of 9.4%, although it had dipped as steeply as 9.8% earlier on Wednesday.
A potential rationale for the day’s downturn was a report from MIT’s Nanda Initiative, which indicated that many corporations are yet to witness tangible returns on their generative AI investments, as stated by Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
However, a more predominant factor appears to be the overarching critique that stock valuations have escalated excessively amidst the AI fervor, rendering them prohibitively expensive. Nvidia’s stock had surged by 35.5% year-to-date before Tuesday, while Palantir exhibited an even more dramatic increase, more than doubling in value.
Despite the pullback, proponents of tech stocks maintain that AI heralds a significant transformational wave in the business landscape.
Conflicting profit reports from major U.S. retailers contributed to the market’s stabilization.
TJX, the parent company of TJ Maxx and Marshalls, surged 2.7% following its surpassing of profit and revenue forecasts. It also revised its full fiscal year profit expectations upward, with CEO Ernie Herrman noting “robust demand” across all segments of their U.S. and international operations and a promising start to the current quarter.
Lowe’s edged up 0.3% after exceeding analysts’ profit expectations for the recent quarter.
In stark contrast, Target plummeted by 6.3%. The retailer announced that CEO Brian Cornell is set to resign on February 1, with veteran insider Michael Fiddelke appointed as his successor. Fiddelke has previously revitalized the company; however, Target continues to grapple with declining sales in an increasingly competitive post-pandemic retail environment.
Estee Lauder saw a decline of 3.7% after projecting a profit forecast for the upcoming fiscal year that disappointed Wall Street expectations. The beauty giant indicated that anticipated tariffs would likely disadvantage earnings by approximately $100 million in the forthcoming period.
La-Z-Boy faced a dramatic 12.1% decline following disappointing profit and revenue figures for its spring quarter.
In summary, the S&P 500 fell by 15.59 points, concluding at 6,395.78. The Dow Jones Industrial Average increased by 16.04 to reach 44,938.31, while the Nasdaq composite decreased by 142.10 to 21,172.86.
Anticipation looms for the upcoming Friday, when Federal Reserve Chair Jerome Powell is slated to deliver his much-anticipated address in Jackson Hole, Wyoming. Market hopes are pinned on Powell hinting at imminent interest rate cuts.
This year, the Fed has maintained its primary interest rate steady, largely due to concerns that President Donald Trump’s tariffs could heighten inflation. Nonetheless, a disappointing jobs report may now overshadow this concern.
In tandem with expectations of lower interest rates, Treasury yields declined notably, with the 10-year Treasury yield falling from 4.30% to 4.29% by late Tuesday.
Trump has vociferously called for reduced interest rates, frequently directing personal barbs at Powell during his campaign. On Wednesday, Trump urged a Federal Reserve official, Lisa Cook, to resign following allegations from one of his administration’s members accusing her of mortgage fraud.
Internationally, stock indices exhibited mixed performances across Europe and Asia.
London’s FTSE 100 increased by 1.1%, despite a report indicating that U.K. inflation surged beyond expectations through July, driven by escalating airfares and food costs.
Hong Kong’s Hang Seng index rose by 0.2%, propelled by shares of the Chinese toy company, Pop Mart International Group, which skyrocketed by 12.5% after its CEO projected annual revenues could exceed $4 billion and announced the launch of a mini version of their beloved Labubu dolls.
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