The Dow Jones ended the session lower by nearly 200 points, while the S&P 500 closed at the flat line. The Nasdaq Composite closed 0.5% higher at another record high, while the Nasdaq 100 gained for the fifth day in a row to notch a record high of its own. This is also the longest winning streak for the Nasdaq 100 since April this year.
Gains on the Nasdaq 100 were led by Shopify, which surged over 7% after its partnership with Meta for its Muse AI product. Financials were the big underperformers and dragged the Dow Jones lower on concerns about the damage AI would cause to margins and fees at financial brokerages. Financials have a 27% weightage on the Dow Jones.
Consumer service stocks like Expedia and Planet Fitness also fell on fears that Meta’s Muse AI products, along with other assistants are now able to complete digital tasks like price comparison and travel booking.
Among financial names, Allstate Corp and Charles Schwab, both big broking houses, fell 5.5% and 6.1% respectively after Muse AI posed a threat to brokers’ income, according to analysts at Truist Securities.
However, many analysts have still flagged concerns with regards to this market rally. Jonathan Krinsky of BTIG LLC said that the market breadth continues to remain weak and that the number of S&P 500 stocks that fell to a 52-week low on Tuesday, were much higher than the number of stocks that hit a 52-week high.
Bowersock Capital Partners also cut its S&P 500 target to 7,800 for the end of the year, stating that the markets have made their gains for the year and rising interest rates will turn out to be a drag on stocks.
It was a mixed session on Wall Street despite the fall in oil prices with Brent crude falling below the $100 a barrel mark on the back of multiple news reports.
A report from Reuters stated that Saudi Arabia is set to begin operations at its East-West pipeline soon, and ramp it up to 40% capacity within the next two days, while another, first reported by Kyodo News Agency in Japan, said that Iran plans to reopen the Strait of Hormuz within seven days if the US eases military pressure and the naval blockade.
The Kyodo News Agency story was then reported by Reuters, quoting an unnamed senior Iranian Government official, but was denied by another Iranian official to MS NOW.
All eyes now will be on the visit of Chinese President Xi Jinping to the US and their conversations with President Donald Trump on trade, tariffs and AI.