Midday: U.S. stocks continue to fall, with all three major stock indexes likely to record losses this week
In the early morning of July 18th, Beijing time, U.S. stocks continued to fall in midday trading on Friday, and all three major stock indexes are likely to record losses this week. Rising concerns over artificial intelligence spending weighed on market sentiment and dragged technology stocks lower. U.S. Treasury yields fell. The Dow fell 89.61 points, or 0.17%, to 52,463.36 points; the Nasdaq fell 313.87 points, or 1.21%, to 25,568.08 points; the S&P 500 fell 49.58 points, or 0.66%, to 7,484.19 points. All three major U.S. stock indexes are likely to record losses this week. U.S. Treasury yields fell on Friday as traders continued to focus on escalating tensions in the Middle East, after a series of economic data released this week showed that the U.S. economy is suffering from inflationary pressures caused by U.S.-Iran tensions. The yield on the key 10-year Treasury note, the main benchmark for mortgages, auto loans and credit card debt, fell more than 4 basis points to 4.525%. The yield on the 2-year Treasury note, which typically moves in line with the Fed's short-term interest rate decisions, fell 3 basis points to 4.124%. The 30-year Treasury yield, which tends to track broader geopolitical events, fell more than 3 basis points to 5.061%. Global chip stocks extended losses on Friday, with shares of U.S.-listed chipmakers and related companies falling in pre-market trading. The iShares Semiconductor ETF (SOXX) fell nearly 3% and the VanEck Semiconductor ETF (SMH) fell more than 2%. The company and Ram Research shares fell 4% and 3% respectively. , KLA Corporation and Arm all fell around 3%. fell more than 1%. Nvidia shares fell 2%. The losses added to losses in the previous session, which were also led lower by the semiconductor sector. SMH fell 6.9% this week and is on track to post its third weekly decline in four weeks. Major stock indexes also fell this week, with the S&P 500 falling 0.6%, the Dow and the Nasdaq falling 0.2% and 1.5% respectively. The sell-off in Asia-Pacific markets accelerated on Friday, with chip stocks extending their losses. The sell-off also spread to European markets on Friday. Investors are "increasingly questioning the sustainability of the current AI capital spending boom," BBH strategists said in a note early Friday. "The Bank for International Settlements' annual economic report warns that boom-bust cycles have been common in past investment booms driven by transformative technologies," they noted. Meanwhile, Barclays strategists appeared unfazed by tech stock volatility in a note on Friday. "While tech stock volatility is likely to persist in the short term, we believe the rebalancing of positioning will ultimately prove healthy, creating more attractive entry points for long-term investors targeting structural AI themes," they said. Shares were also a major drag on Friday, falling more than 11% after the company reported second-quarter results that were broadly in line with expectations but a disappointing profit forecast. The further escalation of the US-Iran war also remained the focus of the market on Friday, and oil prices rose accordingly. U.S. West Texas Intermediate crude futures were last trading above $80 a barrel, while international benchmark Brent crude futures were trading above $85. U.S. Central Command said it completed its sixth consecutive night of strikes against Iran overnight, hitting dozens of military targets, including logistics infrastructure and maritime capabilities. Iranian officials claimed on Friday that they had launched attacks against U.S. troops in Syria and Bahrain, further expanding Tehran's scope of attacks across the Middle East. The collapse of a fragile ceasefire agreed last month has once again disrupted energy shipments through the strategic Strait of Hormuz, which normally carries about 20% of global oil shipments. Data released by the U.S. Bureau of Labor Statistics on Friday showed that the price of U.S. imported goods unexpectedly rose in June, with prices of goods from China recording the largest monthly increase in more than 18 years. Import prices rose 0.3% month-on-month during the month, with falling energy prices offset by increases in other areas. On a year-on-year basis, import prices jumped 7.1%, the largest increase since August 2022. Economists surveyed had expected import prices to fall 0.8% in June.
The report shows that the construction of artificial intelligence infrastructure may be driving up prices, with computer, peripheral and semiconductor costs all rising. In addition to those areas, industrial and maintenance machinery drove up costs, offsetting a 0.4% decline in fuels and lubricants, a category that had posted a 12.6% increase in May, the Bureau of Labor Statistics said.
The report shows that the construction of artificial intelligence infrastructure may be driving up prices, with computer, peripheral and semiconductor costs all rising. In addition to those areas, industrial and maintenance machinery drove up costs, offsetting a 0.4% decline in fuels and lubricants, a category that had posted a 12.6% increase in May, the Bureau of Labor Statistics said.