By STAN CHOE, Associated Press Business Writer
NEW YORK (AP) — The U.S. stock market seems to be holding steadier on Friday, for now at least, following weeks of scary swings driven in part by worries that prices for AI stocks, cryptocurrencies and other Wall Street stars shot too high.
The S&P 500 rose 0.3% in early trading. The Dow Jones Industrial Average was up 187 points, or 0.4%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.
Stocks appeared to get a boost from a speech by the president of the Federal Reserve Bank of New York. Markets perked up immediately after John Williams told a conference in Chile that he sees “room for a further adjustment” in the near term for interest rates.
That could indicate he may vote for another cut to interest rates in December. What the Fed does is critical for the stock market because prices ran to records through last month in part because of expectations for a series of invigorating cuts to interest rates by the central bank.
But a gain for the U.S. stock market in the morning guarantees nothing, as Thursday’s violent pivot showed.
The market began that day with a big gain after Nvidia seemed to tamp down worries about a potential bubble for stocks riding the mania around artificial-intelligence technology. But it quickly gave up all of it and dropped to a sharp loss for its biggest reversal since April, when President Donald Trump shocked financial markets worldwide with his “Liberation Day” tariffs.
Despite the strong profit report from Nvidia, whose chips are powering the move into AI and are proving indispensable for many buyers, worries are still hanging around about what will happen in the longer term. Will all the AI chips and data centers that Amazon, Meta Platforms and other companies are paying for actually turn into big profits and productivity eventually? If not, some investors fear, all the investment won’t be worth it.
AI-linked stocks were still skittish on Friday. Nvidia went from an initial gain to a drop of 1.1%, for example. Palantir Technologies rose 0.8% to recover some of its 5.8% slide from the day before. Proponents are still professing their belief in a revolution for the economy that will arrive because of AI, even as critics say stock prices are simply too high and frenzied.
Other big swings were also continuing underneath the market’s surface. Cryptocurrency prices keep tumbling after soaring earlier this year with hopes for cuts to rates.
Bitcoin briefly plunged below $81,000, before pulling back toward $85,000. That’s down from nearly $125,000 last month, and it’s back to where it was in April, when markets were shaking because of Trump’s tariffs.
Helping to lift Wall Street, meanwhile, were several retailers. Gap jumped 6.2% after the apparel company reported a stronger profit for the latest quarter than analysts expected. CEO Richard Dickson said it saw strong sales trends at each of its Old Navy, Gap and Banana Republic brands.
Ross Stores rose 4.9% after it likewise delivered a better profit than expected. CEO Jim Conroy said it saw broad-based growth during the quarter and raised the company’s forecast for an important measure of sales during the holiday shopping season.
In the bond market, Treasury yields eased. Following Williams’ speech, traders were betting on a 75% probability of a December cut, up sharply from 39% a day before, according to data from CME Group. That helped send the yield on the 10-year Treasury down to 4.07% from 4.10% late Thursday.
The Fed has already cut rates twice this year to shore up the slowing job market. But lower rates can worsen inflation, which has stubbornly remained above the Fed’s 2% target. That had raised doubts about whether the Fed will cut again at its final meeting of the year next month.
In stock markets abroad, indexes were mixed in Europe after markets tumbled in Asia following Wall Street’s stunning reversal.
Japan’s Nikkei 225 fell 2.4%, and South Korea’s Kospi dropped 3.8% for two of the larger losses.
AP Writers Teresa Cerojano and Matt Ott contributed.