Wall Street slips after a morning rally evaporates as some of the market's AI darlings drop
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NEW YORK (AP) — U.S. stocks slumped Wednesday after a morning rally evaporated, but the losses on Wall Street weren’t as bad as the manic moves that wracked markets worldwide over the last week.
The S&P 500 slipped 0.8% after an earlier jump of 1.7% petered out. The Dow Jones Industrial Average fell 234 points, or 0.6%, while the Nasdaq composite dropped 1%.
Stocks swung lower as Nvidia, one of Wall Street’s most influential companies, went from a morning gain of 4.4% and pushing strongly upward on the S&P 500 to a loss of 5.1% that made it the index’s heaviest weight. Nvidia and other Big Tech stocks have been struggling the last month on worries their prices shot too high amid Wall Street’s frenzy around artificial-intelligence technology.
A profit report from Super Micro Computer, whose stock more than quadrupled in less than three months to start the year, helped further mar excitement around AI. Even though its revenue soared 143% in the latest quarter, profit for the company that sells server and storage systems used in AI and other computing fell short of analysts’ heightened expectations. Its stock tumbled 20.1%.
Still, other signals in the market showed less fear than in prior days when sharp losses cascaded globally. The S&P 500 is coming off a 1% rally that broke a brutal three-day losing streak where it tumbled a bit more than 6%.
Several reasons were likely behind the slide for markets worldwide, and one of them centered in Japan seems to be calming. The Bank of Japan raised its main interest rate a bit last week in a small move that sent aftershocks worldwide. It scrambled a favorite trade among some hedge funds and other investors, who borrowed money for very cheap in Japanese yen and then invested it elsewhere around the world.
Speaking to business leaders in the northern island of Hokkaido, Shinichi Uchida, deputy governor of the Bank of Japan, acknowledged the recent market turmoil, which was also triggered in part by concerns about the slowing U.S. economy.
Japan’s central bank can afford to wait, he said, and “will not raise its policy interest rate when financial and capital markets are unstable.” He also said he believed the U.S. economy would have a “soft landing” and avoid a recession, even if fears have risen the Federal Reserve has kept interest rates too high for too long in hopes of stifling inflation.
The Japanese promise offered a balm for markets, nervous about additional moves by the Bank of Japan, which only recently ended its yearslong campaign to keep interest rates below zero.