NEW YORK (AP) — Most of Wall Street is rising, even as stocks of computer chipmakers continue to tumble worldwide. Oil prices, meanwhile, are easing further from the two-month high they hit last week. The S&P 500 slipped 0.2% in early trading Tuesday, but the modest move masked big swings underneath the surface. Micron Technology sank more than 7% The Dow Jones Industrial Average rose 283 points, and the Nasdaq composite fell 0.7%. South Korea’s Kospi
index plunged nearly 11% on heavy selling of computer chipmaking stocks that have been battered by fears that the AI boom may turn out to be a bubble.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street is mixed in early trading Tuesday with chipmakers getting hit again after a huge sell-off in South Korea.
South Korea’s Kospi index plunged nearly 11% Tuesday on heavy selling of computer chipmaking stocks that have been battered recently by fears that the AI boom may turn out to be a bubble.
Trading was temporarily halted at times as Kospi dropped to its lowest level since April, closing 10.8% lower at 6,023.66. Shares in chipmaker Samsung Electronics sank 13.4% while those of SK Hynix tumbled 14.7%.
It was less dire in New York, where futures for the S&P 500 were unchanged, while futures for the Dow Jones Industrial Average rose 0.7%.
Still, futures for the technology-heavy Nasdaq slid 1% with most chipmakers down anywhere from 2% to 5%. While those losses would be significant for most companies, many chipmakers and other AI-related companies have seen their market values double and triple since the beginning of the year.
On Monday, SK Hynix’s U.S.-traded shares fell to below the $149 initial public offering, or IPO, price for its Wall Street debut earlier this month, closing at $143 a share.
A key factor driving the selling of AI-related shares, analysts said, is the expectation that rising competition from Chinese AI startups and chipmakers might undermine gains for leading global companies whose shares have skyrocketed in the past months due to the AI frenzy.
A 466% jump in the price of Chinese memory chipmaker CXMT in its trading debut Monday underscored such concerns. CXMT raised at least $8.6 billion in its IPO in Shanghai. But its shares dropped 4% Tuesday.
Tuesday’s chip stock sell-off also followed a report in the technology news publication The Information that China has begun mass production of homegrown deep ultraviolet, or DUV, chipmaking tools. Such equipment is used to print minute circuit patterns onto silicon wafers.
“We believe the market was likely spooked by the progress of China’s chipmaking equipment capabilities, and was worried that this progress would threaten the competitive position of global chipmaking and chip equipment leaders,” said equity analyst Jing Jie Yu of Morningstar.
“That said, we believe the sell-off today is largely a knee-jerk reaction and overdone,” he said. The dominant position of global chipmaking leaders is unlikely to be threatened meaningfully, he said.
In U.S. trading, shares of Johnson & Johnson rose 3% after the drugmaker agreed to pay $5.5 billion to settle remaining lawsuits that claim its talc products caused ovarian cancer.
J&J, which has been dealing with talc-related lawsuits for years, said in a statement that the settlement is conditioned on at least 95% of remaining claimants participating.
Coca-Cola Co. jumped 4.5% after it beat Wall Street's sales and profit targets. United Parcel Service also reported strong earnings for its most recent quarter but its shares rose a modest 1%.
Back in Asia, Tokyo’s Nikkei 225 dropped 4% to 62,364.92. The Taiex in Taiwan skidded 4.7%, with shares of leading chipmaker TSMC, or Taiwan Semiconductor Manufacturing Co, falling 3%.
Hong Kong's Hang Seng gained 0.4% to 25,310.85, while the Shanghai Composite index lost 1.2% to 3,813.31.
Australia's S&P/ASX 200 gained 0.6% to 8,947.80.
India's Sensex edged 0.1% lower.
At midday in Europe, Germany’s DAX and the CAC 40 in Paris were each up less than 0.1%, while Britain’s FTSE 100 picked up 0.5%.
Oil prices extended their declines as the U.S. and Iran refrained from strikes in their on-again, off-again war. Regional officials said Monday that mediators had made progress in getting the U.S. and Iran back to negotiations after they paused attacks.
Brent crude, the international standard, fell $1.35 to $84.52 a barrel. It was trading around $72 per barrel before the Iran war began in late February.
U.S. benchmark crude oil lost 81 cents to $81.80 a barrel.
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AP Business Writer Matt Ott contributed.
