Rebounding AI stocks lift Wall Street
NEW YORK (AP) — A rebound for stocks in the artificial intelligence industry is lifting the U.S. market on Wednesday.
The S&P 500 rallied 1.4% and is close to recovering all of its brutal sell-off from last week triggered by worries about a potential slowdown for AI-related businesses. The index pulled within 2.5% of its all-time high set last month.
The Nasdaq composite rallied a market-leading 1.8% because of the strength for tech stocks, while the Dow Jones Industrial Average was up 253 points, or 0.5%, with an hour remaining in trading.
Leading the way was one of the stocks that's been at the center of the AI industry’s manic recent swings. CoreWeave, which rents out access to AI chips to customers over the cloud, leaped 23.9% after showing investors that it lost less money during the summer than analysts expected.
It also made announcements that could allay some of the worries dogging it and the wider industry. For one, concerns are high about how CoreWeave and other companies will handle higher interest rates in the bond market, which make borrowing money more expensive.
CoreWeave CEO Michael Intrator said his company has roughly $9 billion in customer prepayments and deposits expected in the next three months, along with other sources of cash to help pay its bills. That had some analysts saying it’s making progress toward being able to self-fund its business.
Worries have also been rising about a potential slowdown in the overall industry given longstanding worries about whether AI will produce enough profit and productivity to make the expensive investments worth it. Such concerns hit a higher level following sweeping victories for Democrats in last week’s U.S. midterm elections. The worry is that Democratic control of statehouses across the country could lead to restrictions on the construction of additional AI data centers and the industry broadly.
But CoreWeave suggested strength is continuing, at least for now, and it raised its forecast for how much revenue it expects to make this year. The number was higher than analysts expected.
Of course, many challenges remain for CoreWeave and for the AI industry broadly. But CoreWeave’s report nevertheless helped stocks across the industry claw back some of their sharp recent losses.
Micron Technology, which sells memory for computers, rallied 12.8%. Broadcom rose 5.1%. GE Vernova, which is helping to power AI data centers, added 2%.
Even Nvidia climbed 4%.
The chip company that quickly became the face of the AI boom has been falling recently for reasons that have nothing to do with the rest of the industry. Its board is investigating its CEO, Jensen Huang, after he admitted to a relationship with a businesswoman who allegedly fed intelligence and advanced chips to China.
Outside of tech, Fossil Group soared 24.3% after the seller of watches, handbags and other products reported a stronger profit for the latest quarter than analysts expected. It also raised its forecast for revenue this year.
Trading elsewhere on Wall Street was more mixed.
United Airlines lost 1.5% as stocks broadly felt pressure from a rise in oil prices, which recovered some of their losses from earlier in the week.
The price for a barrel of Brent crude added 1.4% to $92.76. It’s near the middle of its $72 to $120 range since the war with Iran sent oil prices much higher early this year.
Higher oil prices tend to push yields upward in the bond market, but the U.S. bond market is closed for the day in observance of Veterans Day.
Yields jumped in the bond market the day before following a worse-than-expected reading on inflation in the United States. The discouraging report raised expectations for coming hikes to interest rates by the Federal Reserve.
Higher yields mean higher rates for mortgages, and companies in the real-estate industry continued to fall Wednesday. Homebuilders D.R. Horton sank 1.7% and Lennar fell 1.6%.
In stock markets abroad, indexes rose across much of Europe and Asia.
South Korea’s Kospi jumped 2.6% for one of the world’s biggest moves, while Hong Kong’s Hang Seng was an outlier after falling 1%.
Stocks rose 0.5% in Shanghai as China’s biggest online shopping festival, Singles Day, began Wednesday. Its sales data will offer a gauge of how strong spending is in the world’s second-largest economy.
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AP Writers Elaine Lai and Michelle Chapman contributed to this report.
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