The performances have been so strong that criticism is rising about prices having gone too far and too fast, like they did during the 2000 dot-com mania. That bubble ultimately imploded, and the S&P 500 halved in value.
Proponents say AI stocks are backed by big growth in profits, something that many dot-com stocks didn’t have at the turn of the millennium. But the Bank of England nevertheless warned on Wednesday of the rising risk that tech stock prices pumped up by the AI boom could face a “sudden correction.”
“On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence,” policymakers at the British central bank said in a report. With Big Tech companies accounting for an increasingly outsized share of sharemarkets, stocks are “particularly exposed should expectations around the impact of AI become less optimistic.”
Elsewhere on Wall Street, AST SpaceMobile jumped 9.2 per cent after Verizon Communications agreed to use its space-based network to offer service to mobile phone customers when needed, starting in 2026. Verizon slipped 0.6 per cent.
On the losing end of Wall Street was Jefferies, which fell 5.8 per cent. The investment bank disclosed some details about its exposure to First Brands Group, a supplier of aftermarket auto parts that filed for bankruptcy protection early last week.
Gold, meanwhile, continued its stellar year and rose further past $US4000 per ounce. Investors have traditionally seen gold as a way to protect against rising inflation, and its price has soared more than 50 per cent this year.
Worries are high about big debt loads that the US and other governments are building, which threaten to push inflation higher. Political instability around the world and expectations for rate cuts by the Fed are also helping to push up interest in gold.
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The Fed cut its main interest rate for the first time this year last month, and it hinted that more reductions may be on the way. Minutes from that last meeting released overnight showed growing concerns among Fed officials about the slowing job market.
Lower rates could help boost the job market and economy, but Fed officials say they’re also staying mindful of inflation, which remains above its target of 2 per cent in the US. Lower rates can give inflation more fuel.
In other international markets, indexes rose in Europe following a weaker finish in Asia.
In the bond market, the yield on the 10-year Treasury eased to 4.12 per cent from 4.14 per cent late on Tuesday.
AP, with staff writers
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