Major U.S. indexes finished mostly lower Monday as energy-market concerns and higher borrowing costs offset gains in several technology, entertainment and restaurant stocks.
By yourNEWS Media Newsroom.
Wall Street opened the week with muted trading as several artificial intelligence stocks recovered from recent losses but rising oil prices and Treasury yields placed broader pressure on the market.
The S&P 500 declined 0.2% Monday after recording only its third losing week since the end of March. The Dow Jones Industrial Average fell 0.6%, while the Nasdaq composite finished nearly unchanged after slipping less than 0.1%.
AI-related companies including Nvidia and Sandisk stabilized following steep declines last week. Investors have grown increasingly concerned that enthusiasm surrounding artificial intelligence pushed some technology valuations beyond levels supported by near-term earnings.
Advanced Micro Devices rose 3.6% after announcing an expanded partnership with Microsoft involving AI products. Microsoft plans to begin using AMD’s new Helios product during the second half of the year.
The agreement helped revive interest in a sector that has faced weeks of selling pressure.
Technology companies are generating billions of dollars in revenue as customers spend heavily on AI chips, computing infrastructure and data centers. Investors remain uncertain, however, whether that spending will eventually produce the profits and productivity improvements companies have promised.
Several major AI investors and developers will soon provide fresh information about that demand.
Alphabet is scheduled to report its latest quarterly results Wednesday and update shareholders on its artificial intelligence operations and spring financial performance.
The results will be closely watched because companies throughout the market face pressure to justify the substantial increases in their share prices. Major indexes remain close to record levels despite recent volatility among AI stocks.
Individual corporate reports produced some of Monday’s largest gains.
AMC Entertainment surged 24.3% after reporting quarterly revenue that exceeded analysts’ expectations.
The movie theater operator said locations in Los Angeles and other cities screened The Odyssey continuously for more than 85 hours between Thursday and Sunday to accommodate demand.
Domino’s Pizza advanced 1.8% after also reporting stronger spring revenue than analysts had projected.
Chief Executive Officer Russell Weiner said orders increased in both the company’s delivery and carryout businesses, although the restaurant industry continued “to face pressure on consumer demand.”
Jersey Mike’s is preparing to enter the public market and has begun its investor roadshow. The sandwich chain plans to offer shares on the New York Stock Exchange at a projected price of between $21 and $25 each.
Consumer-oriented companies continue to operate in a difficult environment as U.S. households contend with elevated inflation and rising gasoline costs.
Energy prices have increased rapidly as the continuing war with Iran disrupts shipping through the Strait of Hormuz.
Brent crude fell below $72 per barrel early this month, returning approximately to its level before the conflict began. Prices have since climbed sharply as fighting persisted and crude shipments through the Persian Gulf became more difficult.
Brent traded between approximately $86 and $91 Monday before settling at $89.22 per barrel, an increase of 1.3%.
The conflict has prevented many oil tankers from traveling through the Strait of Hormuz, a critical route connecting Persian Gulf producers with global customers.
S&P Global counted 127 vessels crossing the strait during the week ending Sunday, nearly 50% fewer than during the previous week.
Reduced maritime traffic has intensified concerns about energy supplies, inflation and the economic consequences of prolonged fighting.
Those worries have also driven government bond yields higher.
The yield on the 10-year Treasury note increased to 4.60% from 4.55% late Friday. It stood at 3.97% before the war with Iran began.
Higher Treasury yields can weaken stock prices by increasing borrowing expenses and making government bonds more attractive relative to riskier investments.
They can also slow economic activity by raising the cost of mortgages, business loans and other forms of credit.
The average rate on a 30-year mortgage has already reached its highest level in nearly a year.
Warner Bros. Discovery contributed to the S&P 500’s decline by falling 3.4%, erasing part of the index’s early gain.
A federal judge ordered Warner Bros. Discovery and Paramount to pause their proposed $81 billion merger for at least two weeks. The delay gives states challenging the transaction additional time to pursue their case in court.
International markets produced mixed results.
European indexes ended the day divided, while trading in Asia was considerably more volatile.
South Korea’s Kospi dropped 4.5%. The index has been particularly sensitive to swings in AI shares because Samsung Electronics and SK Hynix account for a substantial portion of the market.
Chinese stocks moved in the opposite direction. Hong Kong’s market rose 2.4%, while the Shanghai index gained 0.9%.
Monday’s restrained U.S. trading reflected competing forces across financial markets.
Stability among some AI companies and stronger-than-expected corporate revenue provided support, but expensive oil, persistent inflation concerns and rising interest rates prevented the broader market from gaining momentum.
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