US Stock Markets Shuffle After Trade Tension Ease, AI Stocks On The Rise
Stock prices for AI companies increase following President Trump's visit to Saudi Arabia
Wall Street's grandstanding comes to a pause as the stock market takes a moment to catch its breath mid-week. After two days of noticeable gains, the Dow Jones Index closed 0.2% lower at a staggering 42,051 points. The S&P-500 rose marginally by 0.1%, while the Nasdaq Composite advanced by a healthier 0.7%.
The ongoing US-China trade dispute still looms as a major talking point, though there's a buzz of optimism after the recent chill. While the details of future tariffs are yet to be negotiated, the initial 90-day trade truce has eased some pressure. However, a clock's ticking, as original high tariffs are scheduled to resume post the 90-day period, adding a layer of urgency to the proceedings.
Investors eagerly awaited Cisco's third-quarter results, set to be unveiled after the closing bell. Analysts at Vital Knowledge were hopeful, citing signs of robust demand in the data center and enterprise technology segments, decent capital returns, and an attractive valuation. Yet, a few margins impacts from tariffs are likely to be felt. Cisco's stock dipped 0.8% before the numbers.
AI-related stocks sparkled in the limelight, following Saudi Arabia's announcement of investing $20 billion in US AI data centers and energy infrastructure. Throughout the day, Nvidia (+4.2%) and AMD (+4.7%) gained from the alliance formed with Saudi Arabia's Humain, a subsidiary of the sovereign wealth fund announced yesterday. AMD also announced an additional share buyback initiative. Super Micro Computer surged 15.7 percent on a partnership with Saudi Arabia's Datavolt.
Apple's stock took a slight dip. Foxconn, with its first-quarter profits skyrocketing but revenue guidance taking a blow due to tariff risks, sent shockwaves through the market. Recognized as a major Apple iPhone assembler, Foxconn stands to gain from clients speeding up shipments to the US, anticipating potential US import tariffs. Foxconn also plays a crucial role in constructing AI servers for US tech giants like Amazon and Nvidia.
Boeing (+0.7%) and GE Aerospace (+0.7%) reaped benefits from an order placements by Qatar Airways, totaling a whopping $96 billion, as announced by the White House.
American Eagle Outfitters' first-quarter results fell short of expectations, leading the retailer to withdraw its fiscal year 2025 guidance. The stock tumbled 6.5%.
Oil prices paused their upward sprint, consolidating after recent strong gains. Brent and WTI futures dropped by up to 1.3% due to an unexpected rise in US oil inventories. The optimism derived from de-escalating US-China trade tensions could evaporate if market sentiment sours regarding trade talks.
The greenback stabilized following its recent plunge. However, Thu Lan Nguyen, a foreign exchange analyst at Commerzbank, outlined the dollar's ongoing struggle under the weight of US President Donald Trump's persistent calls for interest rate cuts, following Tuesday's unexpectedly low US inflation data. Trump criticized Federal Reserve Chair Jerome Powell for being "too late" to cut rates on his Truth Social platform.
Gold prices plummeted sharply, with the troy ounce diving 2.1% to $3,181. This decline was attributed to a diminished demand for safe havens. Bond-market yields followed suit, with the yield on 10-year notes falling 4 basis points to 4.54%. According to Mark Capleton of Bank of America, yields are poised to increase as foreign investors show signs of decreasing willingness to finance the US deficit, potentially leading to lower demand for US bonds.
EC countries may reconsider their employment policies as they observe the impact of investing in technology sectors, such as AI, on job creation and economic growth. This could be particularly relevant, as finance from sources like Saudi Arabia's $20 billion investment in US AI data centers and energy infrastructure might attract more tech-related projects, potentially creating employment opportunities in these countries.
