AI Stocks Slump, Oil Prices Climb

Wall Street's record-setting rally has been halted by a combination of factors. AI stocks, including Nvidia, Oracle Corporation, Broadcom, Micron Technology, and CoreWeave, are slumping due to concerns about OpenAI's massive spending on data centers and missed targets for new users and revenue. This weakness comes ahead of quarterly earnings reports from major AI spenders like Alphabet Inc., Amazon (company), Meta Platforms, and Microsoft. Concurrently, oil prices, specifically Brent Crude, have climbed significantly due to the ongoing Iran war and the effective closure of the Strait of Hormuz, which is keeping oil tankers stuck in the Persian Gulf. The Donald Trump administration is unlikely to accept Iran's offer to reopen the Strait of Hormuz, and U.S. Secretary of State Marco Rubio has ruled out postponing discussions on Iran's nuclear program. Gasoline prices in the United States have reached their highest since 2022, impacting companies like JetBlue, which reported a worse loss than expected but saw its stock rise due to strengthening demand and cost-cutting measures. In contrast, The Coca-Cola Company reported stronger-than-expected profits, and oil companies like ExxonMobil, Chevron Corporation, ConocoPhillips, and BP saw gains. Treasury yields ticked higher, and the United States — Federal Reserve is expected to hold interest rates steady. The Japan — Bank of Japan also kept its key interest rate unchanged, leading to a decline in Japan's Nikkei 225.