NEW YORK (AP) — U.S. stock indexes muscled higher following a shaky day of trading. The S&P 500 rose 0.3% Thursday after erasing an early-morning loss and pulled closer to its all-time high set last week. The Dow Jones Industrial Average jumped 1.1%, and the Nasdaq composite added 0.1%. Markets had been shaky in the morning, when worries about the strength of the AI boom sent stock indexes tumbling across Asia. But AI stocks pared their losses as the day progressed, while strong profit reports from U.S. companies helped lift other stocks. Treasury yields fell despite another report saying U.S. inflation is worsening.
THIS IS A BREAKING NEWS UPDATE. Check back for updates. AP’s earlier story follows below.
NEW YORK (AP) — Most of Wall Street is rising Thursday and helping to keep indexes steady, even as artificial-intelligence stocks keep swinging sharply on worries about how much longer the AI frenzy will last.
The S&P 500 rose 0.2% after erasing a morning loss and was on track for its second gain in the seven days since setting its all-time high. The Dow Jones Industrial Average was up 508 points, or 1%, with an hour of trading remaining, as the majority of U.S. stocks climbed. The drops for AI stocks, though, dragged the Nasdaq composite down 0.2%.
Markets were much shakier earlier in the day. A sell-off for AI stocks that began on Wall Street Wednesday whipped around the world and sent South Korea’s Kospi stock index down 7.6% and Japan’s Nikkei 225 down 4.9% before knocking the S&P 500 lower at the start of Thursday's trading.
They're the latest jarring moves for AI stocks after they led the market for years. Companies are pouring money into the technology in hopes of bigger profits and improved productivity. But data centers and AI chips cost money, and many companies have been borrowing the cash to get them.
Now, after yields in bond markets worldwide hit their highest levels in years and made borrowing money more expensive, worries are rising about how resilient that boom in spending can be. Many AI-related companies have already taken on debt to build out their aspirations, and stocks are struggling under the debt loads.
CoreWeave, which offers AI computing power to customers over the cloud, fell as much as 9.5% in the morning after tumbling 15.5% a day earlier. It said in the summer that it had $4.41 billion in principal payments to make on its debt over the second half of this year and another $6.18 billion in 2027. It had more than $5.5 billion in cash, as of June 30.
High yields in the bond market also generally make investors less willing to pay high prices for stocks, particularly those seen as the most expensive.
Nvidia, the chip company that’s ridden the AI boom to become Wall Street’s most valuable company, fell 1.7% and was the heaviest weight on the S&P 500. It came into the day with a nearly 1,415% gain since the end of 2022.
But the losses for AI stocks moderated as the day progressed, which helped broad U.S. indexes to steady. CoreWeave flipped to a gain and was most recently up 4.4%.
Stocks outside of AI were resilient, and seven out of every 10 stocks in the S&P 500 rose.
Marsh & McLennan helped lead the market after the insurance and professional services firm reported a stronger profit for the summer than analysts expected. The company, which updated its brand name to Marsh earlier this year, also made more revenue than expected, and its stock climbed 5%.
Expectations are high for profits at all kinds of companies this reporting season, which began in earnest this week. That's what's allowed U.S. stocks to set records despite high inflation and many other worries weighing on Wall Street. Now, companies will need to surpass those high expectations to drive their stock prices even higher.
In the bond market, Treasury yields fell, which means investors were willing to pay higher prices to buy U.S. government bonds. Treasurys have a reputation as a safer investment, one with less risk of the borrower going bankrupt, and investors often flock to them when feeling nervous.
The yield on the 10-year Treasury sank to 5.08% from 5.19% late Wednesday. It had topped 5.30% earlier this month and touched its highest level since 2002 because of worries about high inflation, signals of a strong U.S. economy and other factors.
The drop in yields came even though another report signaled inflation has worsened in the United States by more than economists expected.
Several reports on the U.S. economy also came in stronger than economists expected, which typically pushes yields upward. One report said U.S. retailers made more money last month than economists expected, while another said fewer U.S. workers applied for unemployment benefits last week than expected.
In stock markets abroad, South Korea’s loss was the headliner. Its Kospi index is dominated by two chip companies, Samsung Electronics and SK Hynix, and it fell to its worst day since July. It has dropped 39% since setting a record in June.
Indexes were stronger in Europe, which has less of a dependence on tech stocks. London's FTSE 100 rallied 1.1% for one of the world's biggest gains.
AP Business Writers Chan Ho-him and Matt Ott contributed to this report.
