Wall Street Climbs as AI Chip Stocks Sell Off
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- S&P 500 rose 0.2% toward a third straight gain after five consecutive losses, the Dow added 269 points (0.5%), and the Nasdaq slipped 0.1% as tech lagged.
- An ISM manufacturing report showed slower U.S. factory growth and easing price pressures, pulling the 10-year Treasury yield to 4.46% from a morning peak near 4.50% and reducing pressure on the Fed to hike.
- AI-linked chip stocks led the market down, with Micron Technology plunging 8.8%, Applied Materials falling 8% and Nvidia off 1.5%, as worries about stretched valuations triggered a broad rotation.
- General Mills jumped 7.1% after beating quarterly earnings estimates and announcing a plan to cut $3-billion in costs over four years.
- Kroger slipped 1.1% after agreeing to buy mid-Atlantic grocer and pharmacy chain Giant Eagle for $1.25-billion in cash plus $400-million in liabilities.
- Nike swung to a 4.8% gain after reporting stronger-than-expected quarterly profit, though CEO Elliott Hill said the turnaround faces revenue headwinds.
- The chip rout spread abroad as South Korea's Kospi dropped 2% — one of the world's steepest moves of the session — even though the index is still up 97% year-to-date on AI-fueled gains.
- Brent crude fell 2.3% to US$71.29 a barrel on optimism that a U.S.-Iran deal could reopen the Strait of Hormuz to oil tankers.
Why it matters: The chip rout that hit Micron (-8.8%), Nvidia (-1.5%) and Applied Materials (-8%) on Wall Street is bleeding into Asia, with Seoul's Kospi (-2%) now retreating despite a 97% YTD gain. At the same time, softer ISM manufacturing data pulled the 10-year yield to 4.46% from ~4.50%, giving the Fed cover to hold rates — cheapening borrowing costs just as frothy AI bets unwind across two continents.
