Dow rises 500 points as investors shift beyond AI stocks
The Dow Jones Industrial Average gained 556.21 points as investors moved toward stocks outside technology amid concerns about AI spending and persistent…
The Dow rises 500 points as investors pull back from some AI-linked stocks and seek value elsewhere, while fresh U.S. data point to persistent inflation. The Dow Jones Industrial Average added 556.21 points, or 1.08%, to close at 52,177.69 on Thursday, according to CNBC.
The shift showed up across the market, though technology shares did not fall as a group. The S&P 500 gained 0.33% to 7,744.06, and the Nasdaq Composite rose 0.08% to 26,713.03 after dropping as much as 1.4% during the session.
Investors faced two competing pressures: concern that companies tied to artificial intelligence may be spending too heavily, and economic figures that could push the Federal Reserve toward tighter policy. The market’s gains came as traders moved money into areas outside technology.
AI spending concerns reshape the trade
Seagate Technology and Western Digital extended their declines for the week, alongside SK Hynix. The chipmaker’s shares helped drive a sell-off in South Korea’s Kospi index overnight. CNBC reported that traders were concerned about a possible memory chip glut as South Korea faces growing competition from China.
Tesla CEO Elon Musk addressed the prospect of increased Chinese production in a post on X: “China will be making a LOT of RAM in 2028.”
Revenue figures also fed questions about whether AI companies can sustain the expectations reflected in chipmaker valuations. Sources told CNBC that Anthropic’s revenue reached $16.8 billion in the third quarter. Some traders worried its growth might not be fast enough to support the sharp gains in chipmakers.
Not every AI-linked stock fell. CoreWeave gained almost 6%, recovering from losses in the previous session, when the stock dropped more than 15% as investors questioned how much the company was borrowing to build out its AI business. Its corporate bond yields had also surged. Micron Technology recovered from earlier losses and gained nearly 2%.
“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 puts rate policy back in focus
Gains beyond technology helped support the broader market. Walmart shares climbed 1.5%, while Nike rose more than 5%, CNBC reported.
But inflation data added a warning. The September producer price index increased 1.3% on the month and 6.3% year over year, marking the biggest monthly and yearly gains since 2022. Those figures followed Wednesday’s report that consumer prices in September rose faster than expected on a year-over-year basis.
The combination matters for investors because persistent price increases could lead the Federal Reserve to tighten monetary policy more aggressively before year-end. That possibility had weighed on equities Wednesday, according to CNBC.
“Today's PPI report, after Wednesday's CPI, confirms inflation is getting worse as energy prices stay high,” David Russell, global head of market strategy at TradeStation, told CNBC. “Election or no election, prices are rising and the Fed might be forced to act.”
The three major indexes all ended Thursday higher. The Dow’s 556.21-point advance came alongside gains of 0.33% for the S&P 500 and 0.08% for the Nasdaq Composite, as investors weighed inflation risks against shifting expectations for AI-related stocks.
Source: cnbc.com
