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South 32 gained 2.7 per cent after the White House said it is taking a 10 per cent equity stake in the company’s Canadian joint venture partner Trilogy and allowing their Ambler Road mining project in Alaska to go forward. President Donald Trump ordered the approval of a 340-kilometre road through an Alaskan wilderness to allow mining of copper, cobalt, gold and other minerals used for cars, electronics and other technologies. Trilogy’s shares more than tripled.
On Tuesday, the S&P 500 dipped 0.4 per cent, coming off its latest all-time high and breaking its seven-day winning streak. The Dow Jones Industrial Average was down 0.2 per cent and Nasdaq composite was 0.7 per cent lower. Drops for Tesla and Oracle weighed on the US market.
Markets are taking a breather following a rush higher for many investments on hopes that the US economy will remain resilient and that the Federal Reserve will continue to cut interest rates.
The ebullience driven by artificial intelligence has given way to concerns about the rally being excessive after a $US16 trillion ($24 trillion) surge in the S&P 500 from its April lows.
Tesla was one of the heaviest weights on the market and sank 3.9 per cent as it unveiled more affordable models of its Model Y SUV and its Model 3 sedan. That, though, gave back only a portion of its 5.4 per cent leap from Monday, when speculation rose that the electric-vehicle maker may be set to announce a new car.
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Oracle also dragged the market lower. It fell 2.3 per cent after a news report suggested it’s making thin profit margins on a key line of business related to artificial intelligence technology.
The frenzy around AI has been one of the biggest trends guiding Wall Street to record after record recently. It’s been so strong that it’s raised worries that prices have potentially shot too high across the market.
Overnight, IBM rose 1.7 per cent after announcing a partnership that will integrate Anthropic’s Claude AI chatbot into some of its software products. Advanced Micro Devices rallied another 3.4 per cent to add to its surge from Monday, when it announced a deal where OpenAI will use its chips to power AI infrastructure. Dell rose 3.7 per cent after executives talked up the company’s opportunity for growth because of AI at an investment conference.
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Much is riding on expectations that the AI investment boom will pay off by making the global economy more productive and driving more growth. Without that increased efficiency, inflation could push higher due to upward pressure coming from the mountains of debt that the US and other governments worldwide are building.
That has optimists on Wall Street buying tech stocks and pessimists buying gold, according to Thierry Wizman, a strategist at Macquarie Group.
Investors have traditionally seen gold as offering protection from high inflation. Its price has soared more than 50 per cent this year not only because of governments’ huge debt loads but also because of political instability worldwide and expectations for lower interest rates from the Fed.
Investors looking to “hedge” themselves, meanwhile, may be buying both tech stocks and gold, Wizman wrote in a research report.
Elsewhere on Wall Street, Intercontinental Exchange, the company behind the New York Stock Exchange, added 2 per cent after saying it had agreed to invest up to $US2 billion in Polymarket.
Polymarket offers prediction markets that allow customers to profit from making predictions on events across politics, financial markets and popular culture, such as who will become New York City’s next mayor or whether the US government will announce this year that aliens exist.
With AAP and AP
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