Oil drops, stocks mostly higher despite AI concerns

05 Jun 2026 05:53AM

(Updated: 05 Jun 2026 06:55AM)

NEW YORK: Oil prices and the dollar retreated on Thursday (Jun 4) as traders tracked conflicting developments in the Middle East war, while equity markets mostly rose despite a disappointing outlook from US chipmaker Broadcom weighing upon AI stocks.

Iran reported "no tangible progress" in negotiations on ending the war, even as the US House of Representatives passed a resolution seeking to halt American military action.

Israel, meanwhile, struck south Lebanon and threatened new attacks on Beirut despite an announcement earlier that the opposing sides had agreed to implement a conditional ceasefire.

Elsewhere, a disappointing forecast by chip giant Broadcom stoked concerns about AI stock valuations, which have soared in recent months and helped push equity indexes to record highs.

Broadcom's stock closed 12.6 per cent lower, amid revived "doubts about the actual growth rates for artificial intelligence," said John Plassard at Cite Gestion.

While Broadcom and other AI stocks weighed down the Nasdaq, the Dow rallied to a new high on Thursday, jumping 1.7 per cent to 51,561.93.

"You can make the case that some of these semiconductor companies are priced for perfection," said Angelo Kourkafas of Edward Jones. "When the bar of expectations gets so high, it becomes harder to beat it and exceed it."

He added that even as investors appear to be taking some profits after strong moves in many semiconductor stocks, "I don't see anything that necessarily changes the narrative around AI."

"The demand continues and remains strong based on everything we hear," he said.

Investors also braced for a coming IPO by Elon Musk's SpaceX, the rockets-to-AI behemoth that is aiming to raise US$75 billion in the biggest initial share sale ever.

SpaceX said in a regulatory filing that it would offer over 550 million shares at US$135 each next week, which could value the company at a whopping US$1.8 trillion.

US JOBS BOOST

Looking ahead, markets are awaiting government figures on US employment due on Friday morning for a gauge on the health of the economy.

A separate report this week showed that despite rising energy prices, companies in the world's biggest economy in May added the most jobs since the start of 2025.

The dollar fell against main rivals after recent gains thanks to its safe-haven status and expectations that the Federal Reserve could raise US interest rates to combat higher inflation.

Bitcoin flirted with its lowest levels since October 2024, just before the election of Donald Trump, which helped propel the world's leading cryptocurrency to record highs.

Bitcoin "has suddenly started looking less attractive" compared to AI stocks that have soared in recent months, said Swissquote analyst Ipek Ozkardeskaya.

"They have delivered higher returns than Bitcoin while benefiting from actual earnings growth that justifies at least part of their price gains, also explaining the deteriorating interest in harder-to-price cryptocurrencies," she said.

Bitcoin fell under US$64,000 in Thursday trading. It has not fallen under US$60,000 since October 2024.

Source: AFP/fs