NEW YORK (AP) — Technology stocks surged on Wednesday, propelling Wall Street to new heights, despite a general decline in most U.S. stocks following a discouraging update on inflation.
The S&P 500 increased by 0.6%, surpassing its previous record set earlier in the week. Meanwhile, the Dow Jones Industrial Average fell by 67 points, or 0.1%, while the Nasdaq composite climbed 1.2%, setting a new record.
Leading the charge were tech stocks such as Micron Technology, which rose 4.8%, and On Semiconductor, which gained 11.1%. These stocks had dropped the previous day after the momentum for stocks tied to excitement around artificial-intelligence technology was halted.
Nvidia, a key player in the AI boom, saw its shares increase by 2.3%, significantly boosting the S&P 500 due to its large market size. CEO Jensen Huang received an invitation from President Donald Trump to join his trip to China, where discussions could focus on allowing Nvidia AI chip shipments to China.
Earlier, Japan’s SoftBank Group Corp. announced its profit for the year ending in March had increased nearly five times, driven by successful AI investments. Meanwhile, China’s Alibaba Group reported accelerated AI and cloud growth in the latest quarter, with its U.S.-traded shares rising 8.2%, despite falling short of analysts’ overall expectations.
However, most non-technology stocks declined, adding pressure on Wall Street.
“Corporate earnings and AI momentum are acting as the market’s primary shock absorbers, but the road is getting significantly rougher,” said Tim Waterer, chief market analyst at KCM Trade.
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Wednesday’s report revealed that inflation at the U.S. wholesale level was higher last month than economists predicted, following a report on Tuesday indicating rising consumer inflation.
Fuel, transportation, and other prices are climbing due to tariffs, adverse weather impacting food prices, and other factors. However, the primary driver of increased oil prices is the conflict with Iran, which has disrupted the global crude supply to global customers.
On Wednesday, oil prices showed a modest decline after significant increases earlier in the week, with Brent crude oil dropping 2% to $105.63 per barrel.
Despite this decrease, oil prices remain significantly higher than their pre-war level of around $70. The International Energy Agency reported that global oil inventories are being depleted at an unprecedented rate. This surge in oil prices has led traders to abandon hopes of a Federal Reserve rate cut this year. Instead, a rate hike is now seen as a more likely scenario.
Wall Street generally favors lower interest rates as they stimulate the economy by reducing the cost of mortgages and other loans, and can boost stock prices and other investments. However, they can also exacerbate inflation.
The yield on the 10-year Treasury note inched up to 4.47% from 4.46% late Tuesday, significantly higher than its pre-war level of 3.97%.
Rising yields contributed to notable losses for utility and real estate stocks within the S&P 500. These sectors typically offer substantial dividends, which become less appealing when bond interest payments increase.
American Electric Power saw a 3% decline after announcing a $2.6 billion stock offering.
Meanwhile, Birkenstock Holding fell 12.9% as the British company reported its quarterly results were negatively impacted by U.S. tariffs and other issues.
Overall, the S&P 500 gained 43.29 points to reach 7,444.25. The Dow Jones Industrial Average decreased by 67.36 points to 49,693.20, while the Nasdaq composite increased by 314.14 points to 26,402.34.
Internationally, stock indexes rose across Europe and Asia.
South Korea’s Kospi led gains with a 2.6% rise, recovering from a 2.3% drop the previous day. This decline followed a suggestion from a senior government figure about redistributing windfall AI profits from companies to citizens, which had dampened AI stock momentum globally on Tuesday.
AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.
