U.S. stocks demonstrated a cautious drift on Friday, influenced by a decline in oil prices and anticipation surrounding the debut of SpaceX shares later in the day. This event marks the first public offering from a trio of massive companies in the artificial intelligence sector, providing a crucial insight into investor appetite for AI stocks, which have recently experienced significant volatility.
As of 9:35 a.m. Eastern time, the S&P 500 registered a slight gain of 0.1%. The Dow Jones Industrial Average witnessed a more substantial rise of 270 points, or 0.5%, while the Nasdaq composite experienced a small decrease of 0.1%.
The stock performance received a boost from a notable 2.2% decline in Brent crude oil prices, bringing them down to $88.36 per barrel. This dip further deepened losses for the week, primarily influenced by geopolitical developments. President Donald Trump announced the cancellation of potential military strikes on Iran, hinting at an imminent deal that could ease tensions and reopen the Strait of Hormuz, a vital route for global oil transport. The closure of this strait since the onset of conflicts had previously driven oil prices substantially higher, leading to widespread inflationary pressures.
Despite occasional rallies fueled by optimism over an end to the conflict with Iran, past disappointments have left a lingering wariness among investors. More pressing for Wall Street recently has been the surge and subsequent decline of AI stocks, which have been at the forefront of trading activity. Concerns are mounting that these stocks surged too rapidly amid heightened enthusiasm, resulting in erratic trading patterns.
On Friday, several AI-related stocks witnessed declines following a previous day’s uptick. Notable among these was Micron Technology, which fell by 2%, and Broadcom, slipping 0.8%. This volatility may stem from investors reallocating their funds in anticipation of the SpaceX IPO and other major entries in the AI space.
SpaceX, led by Elon Musk, is set to commence trading on the Nasdaq later in the day. The company has significant investments in AI and carries a substantial debt of $29.1 billion as of the end of March. The specifics of the trading start time remain uncertain. Should SpaceX shares maintain their introductory offering price, the company would boast a market valuation of approximately $1.77 trillion, positioning it close to Broadcom and Meta Platforms, which rank among the highest valued companies on Wall Street.
In the bond market, Treasury yields saw a slight uptick, recovering from a sharp slide the previous day driven by the decline in oil prices in reaction to Trump’s remarks. The yield on the 10-year Treasury rose to 4.48%, up from 4.45% the day prior. High Treasury yields have the potential to slow overall economic activity and hinder investment across various asset classes, raising concerns particularly for sectors perceived as overvalued, including the AI industry.
Internationally, stock markets rallied in response to Thursday’s gains on Wall Street. South Korea’s Kospi index rose significantly by 4.6%, recovering from earlier losses mainly attributed to AI-related stock sell-offs. The Kospi has nearly doubled in value since the beginning of the year. Meanwhile, Japan’s Nikkei 225 and France’s CAC 40 also experienced notable increases of 2.8% and 1.8%, respectively, contributing to a positive day for global markets.
