Wall Street drifts as AI stocks hold steadier after last week’s losses

Wall Street drifted to a quiet finish Monday after stocks of chipmakers and other winners of the artificial-intelligence boom trimmed some of their recent losses.

The Standard & Poor’s 500 index slipped 0.2% coming off its first losing week in the last three and just its third since the end of March. The Dow Jones industrial average dropped 307 points, or 0.6%, and the Nasdaq composite was basically flat after slipping by less than 0.1%.

Nvidia added 0.2% and held firmer after its drop on Friday, when it was the heaviest weight on the S&P 500. Sandisk climbed 2.7% after tumbling 29% last week.

Advanced Micro Devices rose 1.6% after announcing an expanded partnership in which Microsoft will use its products for AI, including its new Helios product starting in the second half of the year.

Such stocks have been under pressure for weeks on worries that their prices shot too high in the euphoria around AI. On one hand, companies are making billions of dollars in revenue as customers pour money into AI chips and data centers. But all that spending may fizzle out if AI doesn’t produce as much profit and productivity as promised.

Wall Street may get some hints on that soon as some of the biggest spenders on AI report their latest quarterly results. On Wednesday, Alphabet will tell investors how much it made during the spring and give updates on its AI efforts.

All kinds of companies are under pressure to report strong growth in profit for the spring. They will need to in order to justify the big moves their stock prices have made. Indexes are near their records, even with the recent shakiness for AI stocks.

AMC Entertainment jumped 26.8% after the movie theater operator reported stronger revenue for the latest quarter than analysts expected. It also said some of its theaters in Los Angeles and other cities ran “The Odyssey” for more than 85 straight hours from Thursday through Sunday to meet demand.

Domino’s Pizza climbed 2.1% after delivering stronger revenue for the spring than expected. Chief Executive Russell Weiner said the company saw growth in orders for both its carryout and delivery businesses, even with the broad industry continuing “to face pressure on consumer demand.”

Another restaurant chain, Jersey Mike’s, is beginning its roadshow to raise interest in its stock, which it’s planning to sell on the New York Stock Exchange for between $21 and $25 per share in an initial public offering.

It and other businesses are facing pressure in selling to U.S. households feeling crunched by still-high inflation, thanks in large part to high gasoline prices. The average cost for a gallon of gasoline in the U.S. has climbed back above $4 because of higher crude oil prices.

After dropping below $72 early this month, roughly back to where it was before the war with Iran began, the price for a barrel of Brent crude has been going up recently as fighting continues in the Middle East.

On Monday, the price swung between roughly $86 and $91 before settling at $89.22, up 1.3%.

The war with Iran is keeping oil tankers from using the Strait of Hormuz to deliver crude from the Persian Gulf to customers, which pushes up the price of oil. S&P Global counted only 127 vessels crossing the strait during the week through Sunday, down nearly 50% from the week before.

Worries about expensive oil and high inflation have sent Treasury yields higher in the bond market, which threatens to slow the economy and undercut prices for stocks and other investments.

The yield on the 10-year Treasury climbed to 4.59% from 4.55% late Friday and from just 3.97% before the war. Higher yields have already sent the average 30-year mortgage rate to its highest level in nearly a year.

The higher yields weighed on the broad U.S. stock market, and the majority of stocks fell on Wall Street.

A 3.8% drop for Warner Bros. Discovery also helped erase a gain for the S&P 500 early in the day. A federal judge ordered it and Paramount to halt their $81-billion merger for at least two weeks, allowing states challenging the deal more time to see their case through in court.

All told, the S&P 500 fell 14.41 points to 7,443.28. The Dow dropped 307.16 points to 51,839.26, and the Nasdaq composite slipped 12.17 points to 25,508.07.

In stock markets abroad, indexes ended mixed in Europe.

The moves were sharper in Asia, where South Korea’s Kospi fell 4.5%. It’s been at the center of the huge swings for AI stocks because it’s dominated by two tech companies, Samsung Electronics and SK Hynix.

Stocks were stronger in China, where indexes rose 2.4% in Hong Kong and 0.9% in Shanghai.

Choe writes for the Associated Press.