THE torrid rally in Nvidia and other artificial intelligence-linked equities took a pause on Thursday, leaving the tech-centered Nasdaq lower following seven straight records.
The tech-rich Nasdaq Composite Index finished down 0.8 per cent at 17,721.59.
The broad-based S&P 500, which has also scored multiple records in recent weeks, declined 0.3 per cent to 5,473.17, while the Dow Jones Industrial Average climbed 0.8 per cent to 39,134.76.
The blue-chip index has underperformed the other two indices in recent weeks.
The surge in Nvidia and other chip companies, along with tech giants like Apple and Microsoft that are players in AI, has lifted stocks in 2024, offsetting disappointment at the Federal Reserve’s delaying of interest rate cuts.
Even with Thursday’s 3.5 per cent drop, Nvidia is still up nearly 20 per cent in June alone.
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“When a handful of stocks are pulling the market higher, what happens when those stocks go down?“ asked Steve Sosnick of Interactive Brokers. “It makes things very fragile when they stop.”
But “there is no reason to panic,” Sosnick added.
Market enthusiasm for artificial intelligence has driven a surge in tech stocks, in particular for Nvidia which produces high-end processors prized for AI applications.
Nvidia’s market capitalisation edged past Microsoft on Tuesday to become the world’s most valuable publicly traded company. But with Thursday’s 3.5 per cent drop, Microsoft was back on top at the end of Thursday’s session.
Initial jobless claims for last week came in slightly higher than expected, while housing starts fell.
“This morning’s economic data was aligned with an economic slowing that could raise questions about the achievability of earnings growth expectations and the Fed’s decision to keep its policy rate higher for longer,” said market analyst Patrick O’Hare of Briefing.com.
Data showing slowing growth gives the Federal Reserve some freedom to ease monetary policy, but so far US central bank officials have indicated they wanted to see more evidence of inflation coming down before committing to an interest cut. AFP
