US Stock Market – Mixed Asian Markets Amidst AI-Driven Wall Street Rally

US Stock Market – Mixed Asian Markets Amidst AI-Driven Wall Street Rally

US Stock Market – Asian shares displayed mixed performance in subdued trading on Friday, influenced by Wall Street‘s ongoing enthusiasm for artificial intelligence technology, which pushed indices to new highs.

Japan’s Nikkei 225 surged 0.7% to 38,998.04 after the Bank of Japan decided to maintain its current monetary policy, although it signaled plans to gradually reduce its government bond purchases as it moves away from its ultra-loose stance.

“Even if the BOJ wants to convey that the direction of travel is for tightening, the key guiding principle is gradualism,” commented Tan Jing Yi of Mizuho Bank.

Meanwhile, Australia’s S&P/ASX 200 dipped 0.3% to 7,723.30, South Korea’s Kospi edged up 0.1% to 2,758.21, Hong Kong’s Hang Seng declined 0.7% to 17,988.24, and the Shanghai Composite fell 0.2% to 3,021.88.

On Thursday, the S&P 500 inched up 0.2%, setting a new all-time high at 5,433.74, despite the fact that most of its stocks weakened. The Nasdaq composite rose 0.3%, closing at a record 17,667.56, driven by gains in technology stocks. In contrast, the Dow Jones Industrial Average decreased by 0.2% to 38,647.10.

In the bond market, Treasury yields continued to decline as traders grew more confident that slowing inflation would prompt the Federal Reserve to cut interest rates later this year.

The latest inflation data revealed that wholesale prices fell from April to May, defying economists’ predictions of an increase. This followed a similarly unexpected consumer inflation report on Wednesday, which Federal Reserve Chair Jerome Powell described as encouraging, though he noted that more data is needed before considering a rate cut.

“It’s a question of when they cut, not if,” said Niladri “Neel” Mukherjee, Chief Investment Officer of TIAA Wealth Management.

High interest rates have been weighing on some economic sectors, particularly manufacturing. A separate report on Thursday showed that more U.S. workers filed for unemployment benefits last week than anticipated, although the numbers remain historically low.

Wall Street hopes for a gradual slowdown in job market and economic growth to relieve inflationary pressures without triggering a severe recession.

Companies with profits closely tied to economic strength underperformed on Thursday, including oil-and-gas producers and industrial firms. Dave & Buster’s Entertainment dropped 10.9% after posting worse-than-expected declines in profit and revenue for the latest quarter, citing a “complex macroeconomic environment.”

Other companies have noted a divide among their customers, with lower-income households struggling against persistent inflation. However, some firms have thrived due to the ongoing AI frenzy.

Broadcom’s shares soared 12.3% following a stronger-than-expected profit report, fueled by AI demand, and an increased revenue forecast for the year. Tesla’s stock rose 2.9% after CEO Elon Musk announced that early voting results were favoring approval of his compensation package, with Musk threatening to take AI research to another of his companies if it wasn’t approved.

In the bond market, the 10-year Treasury yield fell to 4.24% from 4.32% on Wednesday and from 4.60% late last month. The two-year yield, which is more influenced by Fed expectations, decreased to 4.69% from 4.76%.

Most Fed officials anticipate one or two interest rate cuts this year, with traders hopeful that cuts could begin as early as September.

Elsewhere, U.S. crude dropped 44 cents to $78.18 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international benchmark, fell 36 cents to $82.39 a barrel.

The U.S. dollar strengthened to 157.82 Japanese yen from 157.02 yen, while the euro remained stable at $1.0742.