The Japan Times - Stocks stabilise after Wall St AI-fuelled sell-off

Both the Dow and the S&P 500 advanced as trading got underway in New York, although the Nasdaq Composite dipped amid continuing concern about the impact of AI.

European and Asian markets were mostly higher.

"The dust settled on Wednesday after a dramatic session for tech-related stocks amid new AI disruption," said Dan Coatsworth, head of markets at AJ Bell.

Nevertheless investors were still shifting out of tech stocks.

"We're seeing a lot of rotation from growth stocks to value stocks, moving from tech into other sectors, and a lot of dispersion of individual stock results," said Steve Sosnick of Interactive Brokers.

Investors were spooked Tuesday by news that AI startup Anthropic -- which created the Claude chatbot -- had unveiled a tool that could be used by firms to carry out legal work.

The announcement hit firms in the software, financial services and asset management industries, with the tech-heavy Nasdaq Composite ending Tuesday down 1.4 percent.

"Investors fear the AI juggernaut will cut deeply into earnings as agents take over workflows and replace more traditional programmes," said Susannah Streeter, chief investment strategist at Wealth Club.

Downbeat sales projections from Advanced Micro Devices compounded the darker mood, with the company's share price falling 12 percent as trading got underway in New York.

Investors will be looking at earnings reports by Google-parent company Alphabet after the close of trading on Wednesday and Amazon on Thursday for indications about AI investment and revenue.

Massive spending to build data centers to run AI applications helped push equity markets to record highs last year, but recurring concerns that a bubble may be forming have recently prompted volatility.

These concerns were primarily that the hefty investments in AI may never make returns, while Tuesday's selloff hit companies that could see their business activity disrupted by the technology.

Meanwhile, data showed private sector employment in the United States rose by a less-than-expected 22,000 jobs in January.

The "update serves as a reminder that the US remains far from a robust jobs market," said eToro analyst Bret Kentwell.

If the jobs report prepared by the US government, delayed by the shutdown, "shows a similar dynamic, it should at a minimum help keep the Fed from adopting an overly restrictive stance as the first quarter progresses," he added.

The US Federal Reserve last week resisted pressure from the Trump Administration to cut interest rates, saying the US economy is expanding at a solid rate.

Investors expect it may next cut rates in June or July if the weakness in the labour market continues.

In Europe, shares in Danish pharmaceuticals group Novo Nordisk plunged over 17 percent in Copenhagen after the maker of Ozempic and Wegovy anti-obesity drugs warned of lower sales this year.

Official data showed eurozone inflation eased below the European Central Bank's two-percent target in January, with the ECB expected to leave interest rates unchanged on Thursday.

The Bank of England is also expected to hold borrowing costs the same day.

Precious metals rose for a second day, after tanking on Friday and Monday as US President Donald Trump's nomination of hawkish Kevin Warsh to head the Federal Reserve sent the dollar surging.

Gold traded back above $5,000 an ounce after posting its largest daily gain since 2008 on Tuesday.

- Key figures at around 1430 GMT -

New York - Dow: UP 0.4 percent at 49,436.56 points

New York - S&P 500: UP 0.1 percent at 6,925.26

New York - Nasdaq Composite: DOWN 0.1 percent at 23,223.95

London - FTSE 100: UP 1.6 percent at 10,475.54

Paris - CAC 40: UP 0.9 percent at 8,254.08

Frankfurt - DAX: DOWN 0.5 percent at 24,658.71

Tokyo - Nikkei 225: DOWN 0.8 percent at 54,293.36 (close)

Hong Kong - Hang Seng Index: UP 0.1 percent at 26,847.32 (close)

Shanghai - Composite: UP 0.9 percent at 4,102.20 (close)

Euro/dollar: DOWN at $1.1812 from $1.1829 on Tuesday

Pound/dollar: DOWN at $1.3698 from $1.3701

Dollar/yen: DOWN at 156.55 yen from 155.74 yen

Euro/pound: DOWN at 86.23 pence from 86.30 pence

Brent North Sea Crude: UP 0.2 percent at $67.44 per barrel

West Texas Intermediate: UP less than 0.1 percent at $63.27 per barrel

burs-rl/gv

K.Okada--JT