Wall Street ended the week on a down note as rising oil prices weighed heavily on the market. The S&P 500 dropped 0.5%, marking its second consecutive weekly loss, while the Dow Jones Industrial Average fell 1.2% and the Nasdaq composite slipped 0.2%. Brent crude oil surged 3.1% to $US116.72, its highest level since June 2022, driven by the ongoing US war with Iran, which has disrupted global oil supply.
Despite the broader market decline, AI-related companies showed resilience. Micron Technology rose 2.5%, Intel gained 1.7%, Microsoft added 0.7%, and Advanced Micro Devices closed 1.7% higher. However, investors remain cautious about the high costs and uncertain returns of AI investments. Angelo Kourkafas, senior global strategist at Edward Jones, noted that investors are increasingly focused on the economics of AI, particularly the substantial upfront costs required to build AI infrastructure.
Industrial and financial stocks faced significant losses. Caterpillar fell 2.4%, American Express slumped 3.7%, and several other financial stocks declined despite strong earnings reports. In contrast, energy companies benefited from higher oil prices, with Chevron rising 2.9% and ConocoPhillips gaining 3.6%. European markets also closed mostly lower, with France’s main index falling 0.4%.
The US 10-year Treasury yield edged up to 4.99%, reflecting global concerns about government debt and persistent inflation. The Federal Reserve is expected to hold rates steady at its next meeting but may hike again in December. Next week, Wall Street will closely watch the personal consumption expenditures index, which is expected to show inflation at a 3.7% rate in September, well above the Fed’s 2% target.