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Financial Markets 06/02 09:19
NEW YORK (AP) -- A drop for Alphabet, one of Wall Street's most influential
stocks, is helping to slow the U.S. stock market's record-breaking rally on
Tuesday.
The S&P 500 slipped 0.1% a day after setting its latest all-time high. The
Dow Jones Industrial Average was down 121 points, or 0.2%, as of 10:05 a.m.
Eastern time, and the Nasdaq composite was virtually unchanged.
Analysts have said the 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. The rally has built with strong profit reports from U.S. companies,
as well as hopes that the United States and Iran will reach a deal to reopen
the Strait of Hormuz. That would allow oil to flow freely again from the
Persian Gulf and hopefully lower its price.
One of the heaviest weights on the U.S. stock market was the parent company
of Google, which fell 2.7% after saying it is raising $80 billion in cash by
selling its stock. Alphabet said it plans to use some of that cash to pay for
its huge investments in artificial-intelligence technology.
It's planning to spend as much as $190 billion on equipment and other
investments this year. That's more than all the stock of The Walt Disney Co.,
Boeing or AT&T is worth, and Alphabet is forecasting spending next year "to
significantly increase."
Such huge sums raise the question about whether AI can produce the profits
and productivity necessary to make all the investment worth it. Critics have
already been talking about the possibility of a bubble in AI investment.
In the meantime, the companies selling the shovels and picks in Wall
Street's latest gold rush continue to benefit.
Hewlett Packard Enterprise soared 25% after reporting a profit for the
latest quarter that blew past analysts' expectations. It credited demand from
customers building their AI capabilities.
Generac climbed 5.8% after saying it signed a deal to provide backup power
generators to an unnamed "leading hyperscale data center operator."
Chip companies also continued to rally. Nvidia rose 2.6%, and Broadcom added
4.5%.
Marvell Technology leaped 24.2% after Nvidia's CEO, Jensen Huang, suggested
at a conference in Taiwan that Marvell could be "the next trillion-dollar
company." The latest to join the growing club of companies worth $1 trillion
was Micron Technology, which is also riding the AI wave.
In the oil market, prices were calmer following Monday's bounce back. Brent
crude oil, the international standard, edged down by less than 0.1% to $94.96
per barrel, though that's still well above the roughly $70 level it was at
before the war.
In the bond market, Treasury yields were relatively steady.
The yield on the 10-year Treasury slipped to 4.45% from 4.47% late Monday.
It briefly jumped after a report said that U.S. employers were advertising many
more jobs at the end of April than economists expected, a potential signal of
continued health for the U.S. labor market. But it quickly pulled back to where
it was just before the report's release.
In stock markets abroad indexes rose across much of Europe and Asia.
Hong Kong's Hang Seng jumped 2.5% for one of the world's biggest moves.
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AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.
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