Wall Street Trims Losses After Oil Prices Drop
US stocks pared losses on Friday (June 26th) after falling oil prices helped ease inflation concerns. The S&P 500 and Dow Jones Industrial Average returned to positive territory, with the Dow potentially closing at a record high near 52,100.
Market sentiment improved after evidence emerged that tankers were continuing to transit the Strait of Hormuz. The continued flow of ships signals that energy supplies from the Middle East are still flowing, despite earlier concerns raised by attacks on ships in the region.
The decline in oil prices is an important factor for the stock market because it can help reduce the risk of energy inflation. Lower energy prices could ease pressure on production costs and consumer prices. This also eases concerns that the Federal Reserve will have to raise interest rates several more times this year.
Stocks in traditional economic sectors also strengthened. Visa and Walmart each rose more than 2%, indicating that investors are returning to more defensive sectors supported by stable consumption. Eli Lilly also came under scrutiny after its shares surged 7% after the European Union endorsed the use of its leukemia therapy.
However, pressure remained in the technology sector. The Nasdaq 100 fell 0.4% as investors reassessed uncertainty surrounding the AI trade. Chip stocks weakened after rallying in the previous session, fueled by Micron Technology's strong outlook. Micron shares fell 4%, while Sandisk, Lam Research, and Western Digital all fell as much as 10%.
The sell-off in chip stocks suggests investors remain cautious about the tech sector's high valuations and the high costs of artificial intelligence infrastructure. Although Micron's previous report indicated strong chip demand, the market is beginning to question whether its massive AI spending can continue to support tech companies' profit growth.
Looking ahead, the Dow's movements will also be increasingly linked to the technology sector after Alphabet is scheduled to replace Verizon on the index on Monday. This change means the blue-chip index could potentially move more in line with the tech-based index, especially if volatility in AI and chip stocks remains high.
Overall, Wall Street remains torn between two major sentiments. The decline in oil prices has helped ease inflation concerns and supported traditional stocks. However, pressure on the technology and chip sectors remains a major drag on the Nasdaq and broader market sentiment.
Source: Newsmaker.id
