U.S. stocks drift after oil prices rise and Nvidia’s latest profit report gets a yawn

Trader Aaron Ford works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

NEW YORK — The U.S. stock market is drifting Thursday following a rebound for oil prices and mixed reports on the U.S. economy.

The S&P 500 fell 0.3 per cent and is on track for a fourth drop in five days after setting its all-time high. The Dow Jones Industrial Average was up 37 points, or 0.1 per cent, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 0.6 per cent lower.

A halt in the torrid run for stocks benefiting from the artificial-intelligence boom has slowed the U.S. market recently. Not even another better-than-expected profit report from Nvidia was enough to kick it back into gear.

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The chip company reported stronger profit and revenue for the latest quarter than analysts expected, while also forecasting revenue for the current quarter that cleared analysts’ estimates. “The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed,” CEO Jensen Huang said.

Such performances and such talk have become routine, though, and Nvidia’s stock swiveled between losses and gains before slipping 1.9 per cent.

Some analysts said the muted reaction may have simply been because investors were locking in profits after Nvidia’s stock had soared nearly 70 per cent over the prior year, more than double the S&P 500’s 27 per cent jump. The broad AI industry is also getting criticism for becoming too expensive, as well as too circular as Nvidia has bought ownership stakes in companies that use its own chips that drive Nvidia’s revenue.

Pressure built on Wall Street, meanwhile, as the price for a barrel of Brent crude oil climbed 2.1 per cent to US$107.26 and trimmed its loss for the week. Oil prices have been swinging up and down with uncertainty about how long the war with Iran will keep the Strait of Hormuz shut, which is preventing oil tankers from exiting the Persian Gulf to deliver crude.

That helped push Treasury yields upward in the bond market, resuming their rises following a slowdown the day before.

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Climbing yields have cranked up the pressure on financial markets worldwide. They’re slowing economies and weighing on prices for stocks and all kinds of other investments. Besides driving up rates for mortgages, high yields could also curtail companies’ borrowing to build the AI data centers that have been supporting the U.S. economy’s growth recently.

The yield on the 10-year Treasury rose to 4.60 per cent from 4.57 per cent late Wednesday.

It had gotten near 4.63 per cent earlier in the morning, after a report gave the latest signal that the U.S. job market remains in better shape than economists expected. The number of U.S. workers applying for unemployment benefits last week unexpectedly declined in an indication of fewer layoffs.

But yields then eased a bit following a preliminary report showing weaker-than-expected growth for business activity among U.S. services businesses, but improved growth for U.S. manufacturers. Companies are feeling the effects of accelerating inflation and are seeing subdued growth in their order books, preliminary data from the S&P Global survey said.

“The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys,” according to Chris Williamson, chief business economist at S&P Global Market Intelligence.

Inflation is worsening even beyond the high oil prices caused by the Iran war, while U.S. households are showing widespread discouragement about the economy.

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Elsewhere on Wall Street, Walmart fell 6.8 per cent following its profit report. The retailer delivered another quarter of impressive revenue but offered up weaker forecasts for upcoming profit than analysts expected.

On the winning side of Wall Street was Ralph Lauren, which jumped 10.5 per cent after reporting stronger profit and revenue for the latest quarter than analysts expected.

In stock markets abroad, indexes were mixed in Europe following bigger moves in Asian markets.

South Korea’s Kospi Kospi soared 8.4 per cent thanks to strength for technology stocks. Samsung Electronics jumped 8.5 per cent after its labor union and management reached an agreement late Wednesday that averted a potentially costly strike. SK Hynix, a chip company partnering with Nvidia, surged 11.2 per cent.

Tokyo’s Nikkei 225 jumped 3.1 per cent, while indexes fell one per cent in Hong Kong and two per cent in Shanghai.

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Stan Choe, The Associated Press

AP Business Writers Matt Ott and Elaine Kurtenbach contributed.