Once up, once down. This time the S&P500 finished in the green

Another day of stock market chaos on Wall Street is behind us. This time, the S&P500 and company ended the day on moderate gains. The tone for the increases was set by chip manufacturers and IT stocks, which were rebounding after a recent decline.

The S&P500 index ended Tuesday's session at 6,890.07 points, which meant an increase of 0.77%. It followed a decline of over 1% on Monday and an increase of almost 0.7% on Friday (and a minimal decline on Thursday). This red-green intertwine has been with us for a week and is a continuation of the local sideways trend that has been going on for several weeks.

The Nasdaq Composite gained 1.04% and reached 22,863.68 points. The Dow Jones industrial average rose by 0.76% and reached 49,147.50 points. Worth noting is the nearly 7% decline in the VIX volatility index. The day before, this popular “fear index” went up by 12%.

The topic of the technological revolution related to generative artificial intelligence algorithms has been in the spotlight of Wall Street for a long time. While in the previous three years there was mainly talk about the benefits associated with implementing AI, now it is mainly about costs and risks. The concerns concern in particular the maintenance of the current business model of IT companies and, more broadly, the entire “white collar” money that constitutes the backbone of modern Western societies.

Tuesday was the day of rebound in the IT sector, which has been significantly depreciated in recent days and weeks. Only since the beginning of the year, the industry sub-index of IT companies in the US has dropped by almost a quarter. But on Tuesday, Salesforce's shares rose by more than 4%, IBM's by 2.7% and Oracle's by 3.4%. The semiconductor sector was also strong. AMD's stock rose by nearly 9% after the company announced the sale of AI chips for USD 60 billion over 5 years to Meta Platforms (i.e. Facebook). In return, Mark Zuckerberg's company will buy up to 10% of shares in AMD. As a result, the shares of competing Intel increased by almost 6% and Qualcomm by over 3%.

– Anthropic has been busy lately announcing how its products will do all these wonderful things for us. However, they are at an early stage of this process, and the implementation of their tools is probably still a long way off – Robert Pavlik, senior manager at Dakota Wealth, did not hide the irony, quoted by Reuters.

Even Federal Reserve officials are beginning to worry that AI could reduce demand for human labor and raise the unemployment rate. This would be another convenient excuse to lower interest rates in the US, which is what President Trump “wishes” so much. There are echoes of the famous Citrini Research report, about which Michał Kubicki from Bnakier.pl wrote more.

K.K

Source: