NEW YORK (AP) — Most of Wall Street is rising Tuesday, even as stocks of computer chipmakers continue to tumble worldwide. Oil prices, meanwhile, are easing further from the two-month high they hit last week.
The S&P 500 was virtually unchanged in early trading, but the modest move masked big swings underneath the surface. The Dow Jones Industrial Average was up 385 points, or 0.7%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% lower.
The majority of the U.S. market rose after more companies delivered stronger profits for the spring than analysts expected. Coca-Cola climbed 5.8% after its revenue rose 7% despite what CEO Henrique Braun called “a dynamic consumer landscape.”
Sherwin-Williams rallied 7%, and Illinois Tool Works rose 3.7% after both also reported stronger profits for the latest quarter than analysts expected. Stock prices generally follow the trend of corporate profits over the long term, and expectations are high for this most recent round with the U.S. stock market sitting near its all-time high.
Such expectations are weighing particularly heavily on stocks of chipmakers and other companies that had been huge winners from the boom in artificial-intelligence technology.
Micron Technology’s stock has more than tripled this year following gangbuster growth, for example. During the quarter through May 28, its revenue more than quadrupled from a year earlier.
But worries are rising about whether such growth is sustainable. Big spenders on computer memory could pull back on their investments if AI does not produce as much profit or productivity as promised. Lower-cost AI models from China could also mean less demand for memory and basic computing power.
Micron dropped 8.4% and was the heaviest weight on the S&P 500. Others also helping to drag the market lower were Advanced Micro Devices, down 7.7%, and Nvidia, down 1.1%.
The losses were even sharper earlier in the day in other markets worldwide for AI chip stocks.
Sharp drops for SK Hynix and Samsung Electronics dragged South Korea’s Kospi index down 10.8%. The market’s losses were so big that trading was temporarily halted at times in Seoul.
“We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders,” said equity analyst Jing Jie Yu of Morningstar.
“That said, we believe the sell-off today is largely a knee-jerk reaction and overdone,” he said. The dominant position of global chipmaking leaders is unlikely to be threatened meaningfully, he said.
In the oil market, the price for a barrel of Brent crude to be delivered in October fell 2.2% to $83.97. Last week, the price for a barrel to be delivered in September briefly shot as high as $102 on worries that fighting in the Middle East would slow the global flow of crude.
That helped to ease Treasury yields in the bond market. The yield on the 10-year Treasury fell to 4.62% from 4.65% late Monday.
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AP Business Writers Chan Ho-him, Elaine Kurtenbach and Matt Ott contributed.
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