AI darlings prop up Wall Street as most other stocks fall

Tech Giants’ AI Investments Propel Wall Street Higher Despite Mixed Market Sentiment

Wall Street edged higher on Monday, powered primarily by gains in tech giants investing heavily in artificial intelligence, even as most stocks in the broader market declined. The S&P 500 rose 0.2% to 6,851.97, approaching its recent all-time high, while the Nasdaq composite climbed 0.5% to 23,834.72. The Dow Jones Industrial Average bucked the trend, dropping 226.19 points, or 0.5%, to 47,336.68.

Nvidia continued its remarkable 2024 performance, rising 2.2% and cementing its position as the strongest driver of the S&P 500’s gains this year. The chipmaker’s stock has surged 54.1% year-to-date, reflecting the company’s dominance in providing the advanced processors required for AI applications.

Amazon shares rallied 4% after the e-commerce and cloud computing giant announced a substantial $38 billion agreement with OpenAI. Under the deal, OpenAI will utilize Amazon Web Services (AWS) to run its AI workloads, significantly expanding the partnership between the two tech leaders.

In another significant AI-related development, cloud service provider IREN jumped 11.5% following Microsoft’s announcement of a $9.7 billion contract that will give the tech giant access to Nvidia’s chips. These developments highlight the intense competition among major tech companies to secure limited AI chip supplies amid surging demand.

Palantir Technologies, another prominent player in the AI space, rose an additional 3.3% ahead of its quarterly earnings report. The data platform company had already seen its stock price soar 165% this year before Monday’s trading, exemplifying the market’s enthusiasm for companies with AI capabilities.

However, concerns are growing that the U.S. market, particularly AI stocks, may be overvalued. Critics have pointed to similarities with the dot-com bubble of 2000, questioning whether current valuations can be justified by actual profit growth. So far, earnings reports have been largely positive, with four out of five S&P 500 companies exceeding analyst expectations this reporting season. With about two-thirds of S&P 500 companies having reported, they are on track to deliver year-over-year profit growth of nearly 11%.

Not all sectors participated in Monday’s gains. Kimberly-Clark dropped 14.6% after announcing plans to acquire Kenvue in a deal valued at $48.7 billion. Kenvue, which owns consumer health brands like Tylenol, Band-Aids, and Listerine, surged 12.3% on the news, reflecting the premium offered in the acquisition.

Beyond Meat experienced significant volatility, tumbling 16% after delaying its quarterly earnings report to November 11. The plant-based meat company cited the need for additional time to assess a non-cash charge related to previously disclosed asset issues. Beyond Meat’s stock had recently experienced a “meme stock” surge, briefly soaring nearly 600% in three days last month before retreating.

In economic news, U.S. manufacturing showed signs of weakness, with activity contracting more than economists had expected in October. Multiple manufacturers reported to the Institute for Supply Management that President Donald Trump’s tariffs are negatively impacting their businesses. “Wonder has turned to concern regarding how the tariff threats are affecting our business,” one chemical products manufacturer noted, adding that “orders are down across most divisions, and we’ve lowered our financial expectations for 2025.”

International markets presented a mixed picture. European indices showed varied performance, while Asian markets generally advanced. South Korea’s Kospi jumped 2.8% to a record high, with SK Hynix soaring nearly 11% following recent collaborations with Nvidia to develop South Korea’s AI infrastructure. South Korean shipbuilders also gained after China announced it would cancel additional port fees on U.S.-invested or U.S.-flagged vessels following President Trump’s recent meeting with Chinese leader Xi Jinping.

In the bond market, the yield on the 10-year Treasury edged down slightly to 4.10% from 4.11% the previous trading day, indicating relatively stable interest rate expectations among investors.