Dow jumps 500 points as investors move beyond tech shares
The Dow Jones Industrial Average rose 556.21 points as investors shifted toward stocks outside technology amid concerns about AI spending and persistent…
Dow jumps 500 points as investors shifted away from technology shares on Thursday, with concerns about artificial intelligence spending and persistent inflation shaping the session. The Dow Jones Industrial Average added 556.21 points, or 1.08%, to close at 52,177.69, while the broader market also ended higher.
The move reflected a rotation toward stocks outside technology, rather than a broad retreat from equities. The S&P 500 gained 0.33% to finish at 7,744.06, and the Nasdaq Composite rose 0.08% to 26,713.03 after falling as much as 1.4% during the session.
Investors weighed concerns that heavy spending on artificial intelligence may not deliver returns quickly enough, alongside fresh U.S. inflation data. The producer price index rose 1.3% on the month and 6.3% year over year in September, the biggest monthly and yearly gains since 2022, CNBC reported.
The inflation report followed September consumer-price data released Wednesday that showed prices rising faster than expected on a year-over-year basis, according to CNBC. Together, the reports raised concern that the Federal Reserve could tighten monetary policy more aggressively before year-end.
AI concerns put chip shares under pressure
Chip stocks remained under strain. Seagate Technology and Western Digital extended declines during the week, as did SK Hynix. The declines helped drive a rout in South Korea’s Kospi index overnight, CNBC reported.
Traders were concerned about a potential glut of memory chips as South Korea faces increasing competition from China. Tesla CEO Elon Musk addressed the issue in a post on X, writing, “China will be making a LOT of RAM in 2028.”
CNBC also reported that Anthropic’s revenue grew to $16.8 billion in the third quarter, citing sources. Some traders questioned whether that growth was fast enough to support the lofty gains in chipmakers.
The pressure was not uniform across AI-related stocks. CoreWeave gained almost 6%, reversing direction after losing more than 15% in the previous session, when investors worried the company was borrowing too much for its AI build-out. Its corporate bond yields also surged. Micron Technology recovered from earlier losses to gain nearly 2%.
Investors are weighing the potential returns from AI against yields available elsewhere. “When Treasurys are yielding 5% and that's the highest since the early 2000s, investors are going to start weighing that versus taking a huge bet on on AI,” Alex Shahidi, co-CIO of MAI Capital Management’s Evoke, told CNBC. “It's not are you in or out of AI; it's how concentrated you want to be.”
Inflation adds pressure to the market outlook
Gains in consumer-facing companies helped support the broader market. Walmart shares climbed 1.5%, while Nike rose more than 5%, CNBC reported. Their advances came as investors sought opportunities beyond the technology trade.
David Russell, global head of market strategy at TradeStation, said the producer-price report reinforced concerns about price pressures. “Today's PPI report, after Wednesday's CPI, confirms inflation is getting worse as energy prices stay high,” Russell said. “Election or no election, prices are rising and the Fed might be forced to act.”
The day’s close left all three major indexes higher, but their gains differed: the Dow led, while the Nasdaq’s rise was modest after its steep intraday drop. Investors will continue to assess inflation data and the outlook for Federal Reserve policy as they decide how much exposure to keep in technology and AI-related shares.
Source: cnbc.com
