U.S. Stocks Dip as AI Optimism Wanes, Trade Policy Unclear
On Thursday, U.S. stocks faltered, retreating from the brink of reaching new highs as enthusiasm for AI diminished and markets awaited details on President Trump's tariff plans.
The S&P 500 (^GSPC) remained largely unchanged, ending a three-day bullish streak that had taken the benchmark index close to setting an all-time high on Wednesday. The Dow Jones Industrial Average (^DJI) gained 0.2%, remaining near its own record high.
The Nasdaq Composite (^IXIC) declined 0.4% as tech stocks failed to sustain the momentum that drove gains the previous day. Nvidia (NVDA) shares fell, alongside fellow tech giants Apple (AAPL) and Google-parent Alphabet (GOOG, GOOGL).
Investors continue to analyze President Trump's recent policy announcements, which included an AI initiative that boosted tech stocks but left questions about potential tariffs on major trading partners, posing a risk to inflation and stocks.
Later on Thursday, President Trump's speech at the World Economic Forum in Davos is expected to provide further insight into his trade policy.
Shares of Amazon (AMZN) and Tesla (TSLA) dipped following announcements of business changes in Canada, a potential target for Trump's tariffs. The e-commerce giant plans to close warehouses in Quebec, resulting in the loss of 1,700 jobs, while Tesla intends to significantly increase prices on all electric vehicle models sold in Canada.
Earnings reports are anticipated to offer potential support to the markets, following Netflix's (NFLX) positive performance on Wednesday. GE Aerospace (GE) shares rose after the jet engine manufacturer announced plans to increase share buybacks to $7 billion.
In the airline sector, American Airlines (AAL) stock slid after a disappointing profit forecast for 2025, while Alaska Airlines (ALK) shares gained due to a smaller-than-expected first quarter loss forecast.
U.S. jobless claims rose by 6,000 to 223,000 for the week ended January 18, according to official figures released on Thursday. Economists had predicted 220,000 claims.