AI stocks lead a rebound on Wall Street as European markets drop following protests
NEW YORK (AP) — Stocks in the artificial-intelligence industry are bouncing back on Wall Street Monday and recovering some of their steep losses from last week, but the rest of the market and stocks worldwide are shaky.
The S&P 500 rose 0.6%, coming off its worst week since June, and the Nasdaq composite rallied 1.4% because it's full of technology stocks. The majority of U.S. stocks outside of AI and tech were falling, though, and the Dow Jones Industrial Average was mostly unchanged, as of 12:35 p.m. Eastern time, after swinging between earlier losses and gains.
In Europe, the drops were sharper as indexes sank more than 1%, including 1.1% in Paris. Those losses followed violent protests over the weekend that could force governments to increase their spending, which would put even more pressure on their bond markets. Yields cranked higher for European bonds even though oil prices edged lower, something that usually eases the pressure.
AI stocks stood out amid all the cross currents, as they have for most of the past few years. A frenzy in spending for AI technology has forced them to the forefront of the market, sending them to record prices and driving indexes higher. Last week, AI stocks grabbed the spotlight after tumbling on worries about how expensive it has become to borrow money, which could threaten the boom.
Much of the spending on AI chips and data centers has come from borrowed money, and Treasury yields in the bond market have recently hit their highest levels in years or even decades. That raises the cost of borrowing money for everyone, from the U.S. government to companies to households.
CoreWeave, a company that’s borrowed to buy AI chips that it rents out to customers over the cloud, has been at the center of the market’s shifts. It rose 1.2% Monday after tumbling 25.2% last week.
Nvidia added 2% and was one of the strongest forces lifting the S&P 500. Because it’s the largest stock on Wall Street by total market value, a 1% move for its stock has more effect on the index than any other’s.
SpaceX, which controls the xAI business, rose 2.1% to $149.14. Its founder, Elon Musk, pledged on Monday to give one share of SpaceX to “every kid in America” next year. The offer came after Anthropic said over the weekend that it will commit 5% of the shares in its highly anticipated initial public offering of stock to a new “public benefit” fund.
AI stocks rose ahead of some profit reports coming later in the week that could offer more details about the strength of AI-related spending.
Meta Platforms, which is pushing its Muse AI agent, will report its latest quarterly results on Wednesday. Lam Research, which supplies equipment and services for the making of semiconductors, will also talk about how its business is doing on Wednesday.
Expectations are high across the board for U.S. companies’ profits from the summer. Analysts are forecasting overall growth of 29% for companies in the S&P 500 from the prior summer, according to FactSet. Those high expectations are what has allowed the U.S. stock market to run to records despite worries about war, high inflation and pressure from the bond market.
Cleveland-Cliffs rallied 16.1% after the steel company reported a bigger profit for the latest quarter than analysts expected. CEO Lourenco Goncalves said it was the strongest quarter for the company in three years and that the outlook for profit in 2027 “has improved materially” from three months ago.
In stock markets abroad, the rebound for AI stocks helped South Korea’s Kospi jump 1.8% to recover some of its 14.5% drop from last week. It is dominated by two huge players in the AI industry, Samsung Electronics and SK Hynix, which has made it much jumpier than other markets.
In Europe, bond yields climbed following mass protests against the rising cost of living and poor school conditions. The protests could put pressure on governments to boost their spending to offer help, but that would likely only add to their already big piles of debt.
Yields rose for French bonds on worries about the government’s already strained budget and climbed much more than yields for Germany, which investors have historically seen as a safer bet.
In the U.S. bond market, yields gained ground as the yield on the 10-year Treasury climbed to 5.15% from 5.09% late Friday. It topped 5.30% earlier this month and touched its highest level since 2002.
Oil prices edged lower. Brent crude, the international standard, fell 0.4% to $109.38 per barrel. It has been yo-yoing between $97 and $110 this month on uncertainty about when the war with Iran will allow the energy industry to return to normal.
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AP Business Writer Chan Ho-him contributed to this report.
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