The three major indexes on Wall Street opened mixed as selling, led by semiconductor stocks, continued. Concerns about the burden of large-scale artificial intelligence (AI) investments by corporations and intensifying competition in China's semiconductor technology are weighing on sentiment.
On the 28th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average rose 298.54 points, or 0.57%, from the previous session to 52,508.62. In contrast, the Standard & Poor's (S&P) 500 fell 8.05 points, or 0.11%, to 7,405.13, and the tech-heavy Nasdaq composite declined 187.31 points, or 0.75%, to 24,744.77.
Selling spread across the semiconductor sector as worries about profitability from expanded AI infrastructure investment overlapped with the rapid catch-up of China's semiconductor technology. Micron is down more than 9% today, and Intel and Applied Materials are each off around 6%. SK hynix ADRs listed in the U.S. are plunging nearly 9% in early trading. Major AI Semiconductor names such as Nvidia and AMD are also weaker.
The market is focused on this week's earnings reports from major technology corporations, including Microsoft, Meta, Amazon and Apple. Investors are watching closely to see whether these corporations can present profitability commensurate with their hundreds of billions of dollars in AI investment.
Robert Pavlik, chief portfolio manager at Dakota Wealth, said, "The market is extremely worried about the scale of the hyperscalers' expenditure," and added, "Deploying funds this massive can feel irresponsible at this point."
By stock, Johnson & Johnson is up more than 2% despite news that it agreed to pay $5.5 billion to settle class-action lawsuits related to talc products. Coca-Cola is up more than 6% as its second-quarter revenue and earnings per share (EPS) beat market expectations, and paint maker Sherwin-Williams is also showing strength on the back of strong results.
European stocks are mostly weaker. The Euro Stoxx 50 is down 0.30%, and Germany's DAX and France's CAC 40 are also trading slightly lower. In contrast, the U.K.'s FTSE 100 showed gains.
Crude prices fell. At the same time, September West Texas Intermediate (WTI) was down 1.65% from the previous session at $81.25 a barrel.