Stock Market Today: Dow Jumps 556 Points as Investors Rotate Out of AI Stocks

TLDR

• The Dow rose 556.21 points, or 1.08%, to close at 52,177.69 as investors moved out of AI stocks.
• Memory chip stocks fell on fears of a glut as China increases competition.
• Producer prices rose 1.3% in September, the biggest monthly gain since 2022.
• CoreWeave gained almost 6% after falling more than 15% the day before.
• Investors have pared back bets on a Fed rate hike in October.

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The Dow Jones Industrial Average rose on Thursday as investors moved money out of artificial intelligence stocks. Worries about tech spending led many to look for value elsewhere.

The blue-chip index added 556.21 points, or 1.08%, to close at 52,177.69. The S&P 500 gained 0.33% to end at 7,744.06.

The Nasdaq Composite rose 0.08% to finish at 26,713.03. It had been down 1.4% at one point during the day.

Memory Chip Stocks Fall

Seagate Technology and Western Digital extended their declines this week. Shares of SK Hynix also fell, which led a rout in South Korea’s Kospi index overnight.

Traders worry about a possible glut of memory chips as South Korea faces more competition from China. Tesla CEO Elon Musk wrote on X that “China will be making a LOT of RAM in 2028.”

Sources told CNBC that Anthropic’s revenue grew to $16.8 billion in the third quarter. Some traders worry that growth may not be fast enough to justify big gains in chipmaker shares.

Other AI stocks recovered. CoreWeave gained almost 6% after it fell more than 15% the day before.

Investors had grown fearful that CoreWeave was borrowing too much for its AI build-out. Its corporate bond yields also surged. Micron Technology rebounded from earlier losses to gain nearly 2%.

Alex Shahidi of MAI Capital Management’s Evoke pointed to Treasury yields near 5%, the highest since the early 2000s. “It’s not are you in or out of AI; it’s how concentrated you want to be,” he said.

Inflation Data Weighs on Investors

Gains came from outside tech as well. Walmart climbed 1.5%, and Nike jumped more than 5%.

The September producer price index rose 1.3% on the month and 6.3% from a year earlier. Those were the biggest monthly and yearly gains since 2022.

Consumer prices also rose faster than expected in September on a yearly basis. The consumer price index rose 0.6% for the month and 3.7% from a year earlier.

Those figures raised concern that the Federal Reserve could tighten policy more aggressively before year-end. Stocks fell on Wednesday after the consumer price data.

David Russell, global head of market strategy at TradeStation, said the producer price report confirms inflation is getting worse as energy prices stay high. “Election or no election, prices are rising and the Fed might be forced to act,” he said.

Markets steadied after the rocky week. Stock futures are drifting slightly higher, and Treasury yields are stable.

Brent crude is near $105 a barrel, and the 10-year Treasury yield is at 5.102%. Investors have pared back bets on a rate hike at the October meeting after Fed Chairman Kevin Warsh declined to signal the next move.