Wall Street Weakens After Setting Records
The US stock market weakened on Friday (May 15th) after previously setting records. Pressure stemmed from rising energy prices and concerns that the Federal Reserve could maintain its hawkish stance for longer. The S&P 500 index fell 1%, the Nasdaq fell 1.7%, while the Dow Jones Industrial Average fell 0.7%.
The biggest declines occurred in major technology stocks, particularly those related to artificial intelligence, hyperscalers, and digital infrastructure. After a speculative rally fueled by strong earnings reports and business projections throughout the week, investors began to take profits. Shares of Nvidia, Tesla, Amazon, Oracle, and Alphabet fell as much as 4%.
Market pressure also spread to other sectors as concerns grew about energy-driven inflation. High energy prices could push up production costs and prices of goods, strengthening the case for the Fed to maintain tight interest rates. Solid US economic data, including low jobless claims, a sharp rise in the retail sales control group, and a surge in producer inflation, further reinforced these concerns.
Boeing shares also remained under pressure after previously plummeting 5%. The decline continued as new orders from Chinese airlines were reported to be only about half of market expectations. Meanwhile, newly listed Pershing Square shares fell 1% after disclosing its stake in Microsoft.
In my opinion, this Wall Street correction appears to be a combination of profit-taking and adjusting market expectations regarding the direction of interest rates. The rally in technology and AI stocks still has long-term appeal, but already high valuations make the market vulnerable to negative sentiment. As long as energy prices remain high and US economic data remains strong, investors will likely be more cautious about taking risks.
Source: Newsmaker.id
