Oil drops below US$80 per barrel, while tech stocks weigh on a mixed Wall Street

BNN Bloomberg is Canada’s definitive source for business news dedicated exclusively to helping Canadians invest and build their businesses.

NEW YORK — Oil prices sank again Tuesday and dropped below US$80 per barrel for the first time since early March, while U.S. stocks drifted near their all-time highs in mixed trading.

The S&P 500 slipped 0.6 per cent and pulled 1.3 per cent below its record set earlier this month. The market was nearly evenly split between stocks rising and falling, and the Dow Jones Industrial Average added 328 points, or 0.6 per cent, to set a record for the second straight day. But drops for some influential tech stocks pulled the Nasdaq composite down 1.2 per cent.

Stocks that had benefited from the boom in artificial-intelligence technology weighed on the market in particular following vicious swings over the last couple weeks.

• S&P 500 market updates here

They’ve been leading the market up and down amid worries that their stock prices shot too high in the mania around AI. That’s taken a toll because chip companies, makers of computer memory and other AI winners have grown so massive that they’ve become some of Wall Street’s most influential stocks.

Drops of 2.4 per cent for Nvidia, 4.4 per cent for Broadcom and 6.2 per cent for Micron Technology were the heaviest weights pulling the S&P 500 lower.

Dave & Buster’s Entertainment sank 6.2 per cent after reporting a weaker profit for the latest quarter than analysts expected, while Robinhood Markets fell 1.4 per cent after the investing platform said that it’s laying off about 10 per cent of its full-time employees.

On the winning side of Wall Street was SpaceX, which rose 4.8 per cent for its third straight gain since its debut on the U.S. stock market. It said it’s moving forward with a purchase of Cursor, a popular AI coding assistant, valuing it at US$60 billion.

Yum Brands climbed 1.9 per cent after it said it’s selling the Pizza Hut chain for US$2.7 billion. Most of the restaurants will go to LongRange Capital, a private equity firm. Those in mainland China will go to Yum China Holdings.

All told, the S&P 500 slipped 42.94 points to 7,511.35. The Dow Jones Industrial Average rose 328.64 to 51,999.67, and the Nasdaq composite fell 307.60 to 26,376.34.

The strongest action was in the oil market, where optimism continued that a tentative U.S.-Iran deal on their war will reopen the Strait of Hormuz at the end of the week and get the global flow of oil going again. The price for a barrel of Brent crude fell 5.1 per cent to settle at US$78.96.

• Stay on top of your portfolio with real-time data, historical charts and the latest news on oil

Significant hurdles remain in the negotiations, including what to do with Iran’s nuclear program. But the hope on Wall Street is that this agreement will mean a long-term fix to a conflict that has worsened inflation around the world. The price of Brent has come down sharply from its US$100-plus level of a few weeks ago, though it could still take months for the energy industry to get back to full speed.

In stock markets abroad, indexes rose in Europe following a mixed performance in Asia.

Tokyo’s Nikkei 225 briefly topped 70,000 for the first time before ending with a modest gain of 0.1 per cent after the Bank of Japan raised its benchmark interest rate to 1 per cent. That’s its highest level in three decades, and it followed a similar move by the European Central Bank last week.

The Federal Reserve began its own meeting on what to do with interest rates Tuesday, with an announcement on the decision scheduled for Wednesday.

It’s the first meeting under the Fed’s new chair, Kevin Warsh, who was nominated by President Donald Trump. Trump has been pushing for lower interest rates, which would give the economy a boost but also threaten to worsen inflation. The widespread expectation, though, is that the Fed will leave its main interest rate alone again.

• Latest economic news on BNNBloomberg.ca

In the bond market, the yield on the 10-year Treasury fell to 4.43 per cent from 4.47 per cent late Monday and from 4.56 per cent earlier this month.

High yields in bond markets worldwide caused by expensive oil prices have threatened to slow economies and undercut prices for all kinds of investments, including stocks and cryptocurrencies.

High yields have already sent mortgage rates higher, and a report on Tuesday said construction crews broke ground on far fewer new U.S. homes in May than economists expected.

___

Stan Choe, The Associated Press

AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.