ASX set to rise as oil prices slide; AI stocks slump

Wall Street rallied after falling oil prices and yields in the bond market eased the pressure on US stocks. Banks, small companies and other stocks that had earlier been left behind by the euphoria around artificial-intelligence technology led the way.

The S&P 500 rose 0.4 per cent for its 10th gain in the last 11 days, a day after dropping from its all-time high. The Dow Jones Industrial Average soared 874 points, or 1.7 per cent, to a record, and the Nasdaq composite slipped 0.1 per cent. The Australian sharemarket is set to rise, with futures at 6.35am AEST pointing to a gain of 32 points, or 0.4 per cent, at the open. The ASX slumped by 1.1 per cent on Thursday.

Stocks got a lift from a 2.8 per cent drop for the price of Brent crude oil to $US95.03 per barrel. That gave back a chunk of its rise from this week caused by the latest flare-ups of fighting between Iran and the United States and its allies.

The expectation on Wall Street seems to be that the United States and Iran will ultimately agree to reopen the Strait of Hormuz to oil tankers. That would hopefully improve the flow of crude, lower oil’s price and remove some of the upward pressure on inflation that’s hurting the world. Such hopes, along with strong profit reports from US companies, helped launch the S&P 500 on a nine-day winning streak that ended Wednesday, a day short of its longest run in three decades.

Stocks of smaller companies helped lead the way, and the Russell 2000 index of the smallest US stocks jumped 1.4 per cent. They can reap the biggest benefits of falling interest rates, and the yield on the 10-year Treasury dipped to 4.47 per cent from 4.49 per cent late Wednesday as oil prices sank.

Lower yields can make it less expensive for companies to borrow cash, which many smaller companies need to do to grow.

Banks also helped lead the market, including gains of 5 per cent for Goldman Sachs, 4.7 per cent for Fifth Third Bancorp and 4.4 per cent for US Bancorp.

They helped to more than make up for losses by some AI stocks, which took a sudden back seat after dominating the market.

Broadcom sank 12.6 per cent, even though both profit and revenue for the chip company surpassed analysts’ expectations. CEO Hock Tan said its AI semiconductor revenue more than doubled to $10.8 billion during the quarter and that demand is only getting bigger. He is forecasting AI semiconductor growth to top 200 per cent in the current quarter.

Investors, though, may have wanted even more after Broadcom’s stock came into the day with a 38.5 per cent surge for the year so far. That towered over