U.S. Stocks Experience Mixed Trading Day as AI Stocks Face Scrutiny

U.S. Stocks Hover Near Record Highs Amid Mixed Trading

NEW YORK (AP) — U.S. stocks experienced a mixed day of trading on Wednesday, with major indexes drifting around their record levels. The S&P 500 edged up by 0.1%, inching closer to its all-time high set just weeks ago. Meanwhile, the Dow Jones Industrial Average soared by 327 points, or 0.7%, marking a record for the second consecutive day. In contrast, the Nasdaq composite dipped by 0.3%.

Leading the charge was Advanced Micro Devices (AMD), which surged by 9% after CEO Lisa Su announced expectations of over 35% annual compounded revenue growth in the next three to five years, attributing this optimism to “accelerating AI momentum.” However, the broader market has shown signs of volatility, particularly among stocks tied to the artificial intelligence boom, as investors grapple with the sustainability of their extraordinary gains.

Despite the recent record highs, concerns linger about the potential for a market correction reminiscent of the 2000 dot-com bubble, which saw the S&P 500 plummet by nearly half. Nvidia, a key player in AI chips, faced a 4.6% decline for the month, following a remarkable price increase that more than doubled over the past five years. Palantir Technologies also felt the pressure, experiencing a 3.6% drop, one of the day’s more significant losses in the S&P 500.

While the AI sector faces scrutiny, other stocks are not immune to similar concerns. On Holdings, a Swiss shoe and apparel company, saw its shares jump by 18% after reporting a profit that exceeded analysts’ expectations, driven by robust sales growth, particularly in Asia. Conversely, Circle Internet Group’s stock plummeted by 12.2%, despite reporting a profit that outperformed estimates.

The overall market sentiment remains cautious, with investors questioning whether companies can sustain the impressive growth needed to justify high valuations. The S&P 500 closed up 4.31 points at 6,850.92, while the Dow climbed 326.86 to 48,254.82. The Nasdaq composite, however, fell by 61.84 to 23,406.46.

In the bond market, the yield on the 10-year Treasury eased to 4.06% from 4.13%, as traders anticipate a nearly 67% chance that the Federal Reserve will cut interest rates at its next meeting in December. This speculation comes despite Fed Chair Jerome Powell’s caution that a third cut this year is not guaranteed, as officials remain wary of stoking already high inflation.

Internationally, markets showed positive momentum, with indexes rising across much of Europe and Asia. Germany’s DAX gained 1.2%, while South Korea’s Kospi jumped 1.1%, reflecting a broader global recovery.

As the U.S. grapples with economic uncertainties, including a prolonged government shutdown affecting key economic data, investors remain vigilant, weighing the potential for growth against the backdrop of high inflation and fluctuating job market indicators.

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