Wall Street closes lower on Friday: Dow falls 1.2% as Brent crude climbs to US$116.72 on supply fears

New York — Wall Street closed lower on Friday, pressured by rising oil prices and doubts about artificial intelligence spending: the Dow Jones fell 1.2%, the S&P 500 slipped 0.5% and the Nasdaq dropped 0.2%, in a session in which nearly three out of every four stocks in the S&P 500 ended lower, according to the Associated Press.

Brent crude rose 3.1% to US$116.72 a barrel, its highest level since June 2022, after trading below US$97 at the start of October. West Texas Intermediate for December delivery closed at US$103.27, up 3.8%. The rally, linked by Reuters to fears of further supply disruptions in the Middle East, fuels concern about inflation and interest rates staying high for longer.

The S&P 500 thus posted its second straight weekly loss, although the Dow ended the week up 0.41%. The technology sector was mixed: Micron rose 2.5%, Intel 1.7%, Microsoft 0.7% and AMD 1.7%, cushioning part of the broader decline.

Behind the volatility is the question dominating the market: whether the lofty prices of artificial intelligence companies are justified and when returns will arrive on investments many firms are funding with debt, in a high-rate environment. “Investors appear increasingly focused on the economics of AI, particularly the substantial upfront costs required to build AI infrastructure and the uncertainty around the timing of returns on those investments,” said Angelo Kourkafas, senior global strategist at Edward Jones, in a note cited by AP.

Next week will be key: Alphabet, Microsoft and Amazon report quarterly results and the Federal Reserve holds its monetary policy meeting, with a decision expected on October 28.

Photo: Archivo A Lo Claro

Source: AP / Barchart