NEW YORK – US stocks closed lower on April 28, backing away from record closing highs as renewed concerns over the artificial intelligence boom weighed on technology stocks days before five of the sector’s most high-profile companies were due to post quarterly results.
Semiconductor shares, which have surged over 40 per cent so far this year, weighed particularly heavily on the Nasdaq, which suffered its biggest daily percentage loss in a month.
OpenAI missed internal targets for weekly users and revenue, raising concerns over the AI heavyweight’s ability to support its massive spending on data centres, according to a report from the Wall Street Journal.
Shares of Oracle, whose reliance on OpenAI for its cloud computing ambitions has been under scrutiny, fell 4.1 per cent.
Chip stocks also dropped, with Nvidia, AMD and Broadcom down between 1.6 per cent and 4.4 per cent. Nvidia-backed CoreWeave slid 5.8 per cent.
“(OpenAI) is giving investors more food for thought, whether the growth is slowing and what that means for capex spending,” said Mr Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “You’ve got major hyperscalers coming out with results tomorrow, which probably gives investors even more reason to take a few chips off the table.”
First-quarter earnings season shifts into overdrive this week, with five of the companies in the Magnificent Seven group of AI-related megacap firms expected to post results. On April 29, Alphabet, Amazon, Meta Platforms and Microsoft are slated to report, with Apple on deck for April 30.
The companies expected to report this week account for about 44 per cent of the S&P 500‘s total market capitalization, according to Raymond James.
General Motors advanced 1.3 per cent after the automaker beat quarterly profit estimates and lifted its full-year earnings forecast, boosted by a resilient US car market and an expected tariff refund.
United Parcel Service shares dropped 4 per cent after the package delivery company reiterated its full-year revenue target as spiking fuel costs offset underlying business improvement.
Coca-Cola rose 3.9 per cent following its better-than-expected quarterly report. The beverage giant played down the impact of high oil prices and raised its annual earnings target.
The Dow Jones Industrial Average fell 25.86 points, or 0.05 per cent, to 49,141.93, the S&P 500 lost 35.11 points, or 0.49 per cent, to 7,138.80 and the Nasdaq Composite lost 223.30 points, or 0.90 per cent, to 24,663.80. Of the 11 major sectors in the S&P 500, tech shares were down the most, while energy enjoyed the biggest percentage gain.
The US Federal Reserve has convened for what is likely to be Mr Jerome Powell’s last monetary policy meeting as chair of the central bank. While the Fed is likely to leave its key interest rate unchanged on April 29, the accompanying statement and Powell’s subsequent press conference will be parsed for policymakers’ views on inflation risk related to the war-related energy price spike.
“We know that the Fed is effectively on hold,” said Mr Oliver Pursche, senior vice-president at Wealthspire Advisors, in New York. “If oil prices remain elevated, does that create an environment where energy-related inflation is not being viewed as transitory any longer, but rather as something that has a very much longer-term impact and might therefore force the Fed to raise rates?”
US President Donald Trump said he is unhappy with Iran’s latest peace proposal because it would delay negotiations on the nuclear issue, dampening optimism that the conflict, which has rattled world markets and sent energy prices soaring, could be close to resolution.
In another blow to oil-exporting countries, the United Arab Emirates announced on April 28 it was withdrawing from OPEC.
Crude prices spiked, reviving inflation worries and contributing to risk-off sentiment. Declining issues outnumbered advancers by a 1.66-to-1 ratio on the NYSE. There were 179 new highs and 42 new lows on the NYSE.
On the Nasdaq, 1,707 stocks rose and 3,004 fell as declining issues outnumbered advancers by a 1.76-to-1 ratio. The S&P 500 posted three new 52-week highs and 14 new lows while the Nasdaq Composite recorded 104 new highs and 95 new lows. Volume on US exchanges was 15.48 billion shares, compared with the 18.11 billion average for the full session over the last 20 trading days. REUTERS
