Tech Sector Slows Nasdaq's Surge Amid AI Profit-Taking
Tech companies' profit-taking halts Nasdaq's upward trend
Stroll down Wall Street and you'll find a mix of anxiety and anticipation. The Nasdaq is taking a breather after its recent streak, falling 0.2% to 19,112 points.
The tech-heavy index has been on a roll, thanks to booming tech, energy, and industrial sectors. But lately, profit-taking in the AI sector is causing some turbulence.
On May 13, 2025, the major market indices closed with mixed results: the Dow Jones Industrial Average climbed 0.7% to 42,323 points, while the S&P 500 added 0.4% to 5,917. However, the Nasdaq slipped due to a profit-taking chill sweeping through AI stocks.
The excitement after easing trade tensions with China is dwindling, according to traders. They warn that the trade war with China isn't over yet. High tariffs imposed by China continue to cast a chill over the industry. As Ellen Zentner, Morgan Stanley's chief U.S. economist, put it, "Despite the de-escalation with China, the trade story isn't over, and it will take some time for the tariffs to show up in economic data."
Walmart Buys Cautious Amid Price Hikes
U.S. manufacturing remained unchanged in April. Meanwhile, the retail sector outperformed expectations, recording a slight increase of 0.1% in revenues from the previous month despite trade uncertainty. Nevertheless, Walmart's performance was better than anticipated in the quarter, but the retail giant issued a warning about price hikes.
Walmart's stock rebounded from losses, closing down 0.5%. A $1 billion merger between Foot Locker and Dick's Sporting Goods sent Foot Locker's shares skyrocketing 85.7%. Dick's is offering $24 in cash or 0.1168 shares of Dick's stock to Foot Locker shareholders. Dick's stock, on the other hand, took a hit, falling 14.6%.
In other tech news, Cisco shares surged 4.8% after citing strong demand for AI data centers in its plans to raise its full-year outlook. Meanwhile, a report from the Wall Street Journal cast a shadow over Meta shares, which closed down 2.3%. The report hints at delays in the launch of Meta's top AI project due to uncertainty about its capabilities.
UnitedHealth shares plummeted 10.9% to a five-year low following reports of potential fraud allegations. The U.S. Justice Department is said to have launched a criminal investigation into suspected Medicare fraud at UnitedHealth. The company insists it hasn't been informed about this probe.
Nuclear Talks Impact Oil Prices
Rumors of a nuclear deal between the U.S. and Iran are causing a ripple in the oil market. North Sea Brent crude and U.S. WTI crude dropped over 2% each, trading at $64.68 and $61.80 per barrel, respectively. If talks succeed, Iran could pour more oil onto the market, causing prices to tumble further.
Stay tuned for more updates on the stock market.
Source: ntv.de, ino/rts
- Dow Jones
- Wall Street
- Stock prices
- Stock trading
- Enrichment Data:The current state of the Nasdaq as of mid-May 2025 displays a positive overall trend with occasional fluctuations. The Nasdaq Composite ended at 17,928.14 on May 9, 2025, climbing 1.1% (189.98 points), reflecting a surge propelled by tech, energy, and industrial sectors and favorable geopolitical developments like a U.S.-U.K. trade deal and potential China talks[1]. However, there were some jitters on May 1, 2025, when the Nasdaq Composite slipped slightly by 0.1% to 17,446.34, affected mainly by weaker performance among major technology stocks[2].
Regarding AI profit-taking, while the data does not directly affirm its occurrence, such market behavior is common after periods of significant gains in AI-related and tech stocks. Investors often cash in on gains during rally phases by selling shares to secure their profits, particularly as valuations become inflated or when the market momentum starts to wane[3]. This profit-taking can trigger temporary setbacks in the Nasdaq, as the index is heavily dominated by technology and AI-driven companies. The AI sector's volatility and speculative interest typically culminate in these price fluctuations as market participants weigh enthusiasm against risk.
Highlights:
- The Nasdaq has been bouncing in the 17,000s to 19,000s range as of May 16, 2025, with recent sessions showing marginal gains punctuated by volatility[1][4].
- Gains have been driven by momentum in the tech, energy, and industrial sectors alongside positive trade developments.
- Occasional profit-taking in AI stocks mirrors investors profiting from sharp gains, putting temporary pressure on the tech-heavy index[2][3].
- Market sentiment remains somewhat hopeful, with the VIX (volatility index) showing milder uncertainty.
- The community policy and employment policy of various companies may need to address the impact of occasional profit-taking in AI stocks on their workforce, considering the potential temporary setbacks in the tech-heavy Nasdaq.
- As investors continue to engage in AI profit-taking, finance departments and investment units within organizations need to evaluate the performance of their portfolios and adjust their business strategies accordingly, considering the volatility of the AI sector and tech stocks in general.
