The S&P 500 gained 0.8 per cent, though it still fell to its first losing month following two fabulous ones. The Dow Jones Industrial Average added 136 points, or 0.3 per cent, to its record, and the Nasdaq composite climbed 1.5 per cent.
The main reason for the past month’s weakness was a fall to Earth for stocks in the artificial-intelligence industry. After soaring to tremendous heights in the frenzy around AI, such stocks came under pressure because of worries that they shot too high. That’s a big deal for all investors because AI stocks have grown into some of Wall Street’s largest and most influential, pulling indexes behind them.
AI stocks were firmer Tuesday, and Nvidia was the strongest force lifting the S&P 500 after rising 2.6 per cent and trimming its loss for the month. That was even though the majority of stocks within the index fell Tuesday.
Microsoft, which is investing heavily in AI, rose 1.2 per cent to cut its loss for the month to 17.2 per cent. Oracle, though, slipped 0.8 per cent to widen its drop for June to 35.1 per cent. It’s another company contending with concerns that AI may not yield enough productivity and profits to make all the big spending worth it.
All told, the S&P 500 rose 58.93 points to 7,499.36. The Dow Jones Industrial Average added 136.46 to 52,319.20, and the Nasdaq composite climbed 393.58 to 26,213.72.
Outside of AI, the economy seems to be rumbling along, even though US households are still feeling sour about it. A report released in the morning said that US employers were advertising many more job openings at the end of May than economists expected, the latest signal that the job market remains resilient.
But a second report said that confidence among US consumers improved by less than economists expected. More Americans are saying it’s hard to get a job, according to a survey by the Conference Board, even with data suggesting continued hiring.
Tuesday’s relatively quiet trading came as companies closed their books for the quarter running from April through June. Investors want to see strong growth in profits to justify the big gains stocks made early in the quarter. Despite June’s drop, the S&P 500 still recorded its best quarter since six years ago, when stocks rocketed out of the crash caused by the COVID-19 pandemic.
Concentrix tumbled 11.2 per cent after the technology company reported profit and revenue for the latest quarter that were just shy of analysts’ expectations.
In the oil market, prices eased after two US envoys arrived in Qatar for talks with mediators about the implementation of an initial deal to end the war in Iran. The Americans will not be having direct negotiations with Iranian diplomats while in Doha.
The price for a barrel of Brent crude oil, the international standard, erased an early, modest rise and fell 1.3 per cent to US$72.95. The hope is that an end to the war will restore full access to the Strait of Hormuz, allowing oil tankers to move more crude and lower its price.
Expensive oil has already sent inflation jumping around the world, which in turn has raised worries that the Federal Reserve and other central banks may have to raise interest rates. Higher rates would keep a lid on inflation, but they would also slow economic growth and hurt prices for investments.
The yield on the 10-year Treasury rose to 4.44 per cent from 4.38 per cent late Monday.
In stock markets abroad, indexes rose across much of Europe and Asia.
Germany’s DAX returned 1.5 per cent, and South Korea’s Kospi climbed 1 per cent for two of the world’s bigger gains.
Japan’s Nikkei 225 rose 0.9 per cent as the value of the Japanese yen dropped near its lowest level against the US dollar in 40 years.
US government bonds are paying much higher yields than their Japanese counterparts, and the possibility of rate hikes by the Fed is putting more pressure on the yen. Speculation is rising that Japan’s government may try to prop up the yen’s value, but Japan’s finance minister said only that the government was ready to “respond appropriately whenever necessary”.
AP
