Wall Street began the week cautiously, as a selloff in chipmakers, including a seventh straight session drop for Nvidia, overshadowed a decline in oil prices. This caution was driven by news of potential AI-related price hikes from chipmakers and ahead of Nvidia's earnings report. An ETF tracking memory shares fell 5.9%, and the Nasdaq 100 lost 1%. Conversely, the Dow Jones Industrial Average rose 0.3%, and the S&P 500 fell 0.3%.
Asian markets also saw significant drops. South Korea's Kospi index tumbled 3.12% to 6,696.96, primarily due to investor disappointment over Samsung Electronics' shareholder return plan, causing its shares to decline 8.7% to 257,000 won and SK Hynix to shed 3.41% to 1,671,000 won. Japan's Nikkei 225 fell 0.74% to 65,528.09, influenced by US tech stock consolidation and the Kospi's decline. Other Asian indices, including Hong Kong's Hang Seng and the Shanghai Composite, also saw drops.
The market sentiment was further shaped by Treasury Secretary Scott Bessent's plan to isolate Iran, which contributed to oil prices settling near $85, with West Texas Intermediate crude falling 2.4% to $84.98 a barrel. The decline in energy costs helped lift Treasuries, with the yield on 10-year Treasuries declining four basis points to 4.70%. Investors are also awaiting Federal Reserve Chair Kevin Warsh's speech at Jackson Hole regarding inflation and upcoming US economic data, which are expected to influence market sentiment.
Key technology and AI-related developments included Elon Musk's announcement of SpaceX's first AI satellites powered by Nvidia chips launching in Q4 next year, SoftBank's plans for a record ¥1 trillion ($6.3 billion) retail bond sale for OpenAI investments, and Alibaba's HK$80 billion ($10.2 billion) follow-on offering for AI development. Despite these investments, a "growing sense that AI adoption has peaked is sapping risk appetite and weighing disproportionately on the AI trade's pick-and-shovel providers."
Currencies saw minor movements, with the Bloomberg Dollar Spot Index rising 0.2%, the euro falling 0.1% to $1.1663, and the Japanese yen falling 0.1% to 159.15 per dollar. Cryptocurrencies showed gains, with Bitcoin rising 1.7% to $78,695.51 and Ether rising 0.7% to $2,468.36. Spot gold rose 1% to $4,651.35 an ounce.
