US Stock Markets Mixed After Trump's Saudi Arabia Visit Amidst Ongoing US-China Trade Dispute
Artificial Intelligence stocks surge following Trump's visit to Saudi Arabia
Wall Street took a break from Wednesday's partial gains, with the Dow Jones Index closing 0.2% lower at 42,051 points. The S&P-500 nudged up by 0.1%, and the Nasdaq Composite advanced by 0.7%.
The trade conflict between the US and China still looms over traders, though there are signs of easing since the weekend. However, there's no confirmation on when concrete negotiations will take place regarding future tariff levels. With the originally high tariffs set to return after 90 days, there's a sense of urgency, sources suggest.
Meanwhile, individual values like Cisco were on investors' radar, waiting for their third-quarter results, announced post-market hours. Vital Knowledge analysts expressed optimism given signs of healthy demand in the data center and enterprise technology areas, substantial capital returns, and a reasonable valuation, but expected some margin impacts from tariffs. Cisco stock closed 0.8% lower before the financial figures were revealed.
Stocks with AI references were in high demand, thanks to Saudi Arabia's announcement of $20 billion in AI data centers and energy infrastructure investments from the US the previous day. Nvidia (+4.2%) and AMD (+4.7%) benefited from the partnership with the Saudi Arabian Humain - a subsidiary of the state-owned investment fund announced the day before, and AMD also revealed plans for a share buyback. Super Micro Computer jumped 15.7%, entering a partnership with the Saudi Arabian Datavolt.
Apple stock showed a slight decline. Foxconn reported a surge in profits during Q1, but lower sales forecasts due to tariff risks. Foxconn, the world's largest contract manufacturer of electronics products, known for assembling Apple's iPhones, benefited from customers expediting their deliveries to the US in anticipation of US import tariffs. It also plays a crucial role in building AI servers for US technology giants like Amazon and Nvidia.
Boeing (+0.7%) and GE Aerospace (+0.7%) benefited from a Qatar order worth $96 billion for aircraft and engines from the two companies, announced by the White House.
American Eagle Outfitters saw a 6.5% drop in stock price following disappointing preliminary results for the first quarter and withdrawal of the 2022 financial year forecast.
The dollar consolidated following its recent downturn, but remains under pressure due to US President Donald Trump's continued calls for interest rate cuts, following Tuesday's lackluster US inflation data. Trump voiced dissatisfaction with Federal Reserve Chair Jerome Powell on his Truth Social platform, alleging that Powell is “too late” to cut rates.
Oil prices pulled back after recent gains, with prices for Brent and WTI falling by up to 1.3% after unexpected increases in US oil inventories. The troy ounce fell 2.1% to $3,181 in gold prices, and bond prices fell as well, with the yield on 10-year notes rising by 4 basis points to 4.54%. Mark Capleton of Bank of America expects yields to continue rising as foreign investors show decreased willingness to finance the US deficit, potentially leading to reduced demand for US bonds.
Sources: ntv.de, ino/rts
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- Despite the ongoing US-China trade dispute and uncertainty over future tariff levels, investing in stocks with AI references, such as Nvidia, AMD, and Super Micro Computer, might prove lucrative due to Saudi Arabia's announced investments in AI data centers, potentially leading to increased demand.
- The employment policy in EC countries may benefit from the ongoing investment in technology and infrastructure following Saudi Arabia's announcement of $20 billion in AI and energy infrastructure investments from the US, potentially creating more job opportunities in the tech sector.
