US stocks closed higher on Monday after two weeks of declines, with the S&P 500 and Nasdaq lifted by optimism around AI companies. Anthropic disclosed steep losses and rapid revenue growth in its filing for a US initial public offering. Semiconductor firms helped drive the gains, while Meta plans to raise up to $US95 billion in equity to fund its AI expansion. Investors are watching the Federal Reserve's policy statement on Wednesday and a busy week of earnings reports.
Wall Street closed sharply lower on Friday, with AI-related technology stocks under renewed pressure. CoreWeave and Broadcom both fell, and the Nasdaq Composite dropped 2.15 per cent. Investors worried that heavily indebted AI infrastructure companies may struggle to turn profits in time to repay debts, as borrowing costs are expected to rise. Oil prices also jumped more than three per cent on Middle East supply concerns. The S&P 500 lost 1.10 per cent and the Dow Jones Industrial Average fell 0.36 per cent.
Fuel company Ampol has more than doubled its refining margins and describes conditions as net favourable. Wealth manager Challenger shares rose after a takeover bid from a Japanese life insurer. The ASX finished higher on Monday, avoiding a sharp sell-off on Wall Street. Investors had been worried about spending on artificial intelligence and oil prices rising to US$110 a barrel.
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A small group of AI-linked companies is driving much of the US stock market's gains, prompting warnings about concentration risk. Tech stocks account for about 44 per cent of the S&P 500's total value. Six companies, including Nvidia, Micron and AMD, produced most of the index's gains since April. Experts say some AI labs still earn far less than they spend, and that companies are increasingly investing in one another. Analysts say the technology may transform the economy, but investor returns are uncertain.
Shares in BHP Group have dropped 4.7 per cent. The world's biggest miner is used as a proxy for the AI trade because of its copper exposure, and that trade has cooled. Separately, the unemployment rate has risen to a five-year high of 4.7 per cent, as part-time employment fell by 73,700. Some economists say the rise is not enough to stop another RBA interest rate hike on Melbourne Cup Day.
