Wall Street rises as AI stocks recover more of their losses and oil prices ease

Wall Street saw sharp declines on Tuesday as AI-related stocks reversed early gains, contributing to broader market losses. The S&P 500 fell 1.7% after fluctuating between a 1% gain and a 2.3% loss, while the Nasdaq dropped 2.9% and the Dow Jones Industrial Average lost 408 points. Companies like Micron Technology swung from a 4.2% gain to a 7.6% drop, following a 9.9% surge the prior day and a 13.3% plunge two days earlier. Marvell Technology fell 13.3%, and Advanced Micro Devices declined 8.7%, while Nvidia’s 3.1% drop weighed heavily on the S&P 500 due to its market dominance. Meanwhile, OpenAI filed confidential paperwork for an initial public offering, joining other AI firms seeking high valuations. Oil prices eased slightly, dropping 2.7% to $91.66 per barrel, but remained volatile due to speculation over a potential U.S.-Iran deal to reopen the Strait of Hormuz. President Donald Trump attributed a recent U.S. helicopter downing near the Strait to Iran, warning of a possible response, which heightened geopolitical risks. Higher oil prices have fueled inflation concerns, pushing bond yields up globally. The 10-year Treasury yield dipped slightly to 4.54% but remained elevated compared to pre-war levels. Upcoming inflation reports, due Wednesday and Thursday, will further shape market expectations, with traders anticipating at least one Federal Reserve interest rate hike by year-end. Despite the overall market downturn, more stocks in the S&P 500 rose than fell, reflecting mixed sentiment. The Federal Reserve’s stance on inflation and employment remains critical, as a strong job market and persistent price pressures could prolong tight monetary policy. Investors are now questioning whether AI stocks are due for a prolonged correction or simply adjusting after a period of excessive optimism.