US Stocks Trim Losses for June as AI Shares Rebound

US stocks pared back some of June’s losses on Tuesday, lifted by a rebound in artificial intelligence shares, though the market remains on pace for its first losing month following two strong ones.

Major Indexes Climb as AI Stocks Stabilize

The S&P 500 rose 0.7% in afternoon trading, while the Dow Jones Industrial Average gained 157 points, or 0.3%, and the Nasdaq composite climbed 1.4% as of 1:16 p.m. Eastern time. Despite Tuesday’s gains, the S&P 500 is still headed for its first monthly decline in three, driven largely by a sharp pullback in AI-related stocks.

Why AI Stocks Have Weighed on the Market

The primary driver of June’s weakness has been a retreat in shares tied to the artificial intelligence boom. After soaring to extraordinary heights amid investor enthusiasm, AI stocks have come under pressure on concerns that valuations climbed too far, too fast. Because AI companies have grown into some of Wall Street’s largest and most influential stocks, their declines carry outsized weight on major indexes.

Nvidia rose 1.8% on Tuesday, trimming its monthly loss and emerging as one of the strongest contributors to the S&P 500’s gain. Microsoft, which continues to invest heavily in AI infrastructure, climbed 0.6%, pulling its loss for the month back below 18%. Oracle moved in the opposite direction, falling 0.8% and bringing its June decline to 35% amid persistent concerns that heavy AI spending may not generate sufficient returns.

Job Market Shows Resilience Despite Consumer Pessimism

Outside the AI sector, broader economic data painted a mixed picture. A morning report showed US employers advertised significantly more job openings at the end of May than economists had expected, reinforcing signs of a resilient labor market.

A separate report, however, showed that consumer confidence improved less than forecast in June. According to the Conference Board’s survey, more Americans said it has become harder to find a job, even as hiring data suggests continued labor market strength.

Companies Close the Books on a Strong Quarter

Tuesday’s relatively muted trading session came as companies prepared to close their books for the April-through-June quarter. Investors are looking for strong corporate profit growth to justify the substantial stock gains recorded earlier in the quarter. Despite June’s pullback, the S&P 500 remains on track for its best quarterly performance in six years, since the rebound that followed the COVID-19 market crash.

Concentrix was among the day’s notable decliners, tumbling 15.1% after the technology company reported quarterly profit and revenue that fell just short of analyst expectations.

Oil Prices Drift as Diplomats Pursue Iran Deal Implementation

In the oil market, prices drifted lower as two US envoys traveled to Qatar for talks aimed at implementing an initial deal to end the war in Iran, though the Americans are not expected to hold direct negotiations with Iranian diplomats while in Doha. Brent crude, the international benchmark, fell 0.8% to $73.32 per barrel after erasing an early modest gain. A resolution to the conflict is expected to restore full access to the Strait of Hormuz, potentially easing global oil supply constraints and lowering prices further.

Elevated oil prices have already contributed to rising inflation worldwide, fueling concerns that the Federal Reserve and other central banks may need to raise interest rates. Higher rates would help contain inflation but could also slow economic growth and pressure investment valuations.

The yield on the 10-year Treasury rose to 4.41% from 4.38% late Monday.

Global Markets Post Gains as Yen Weakens

Stock markets abroad also advanced Tuesday. Germany’s DAX rose 1.5% and South Korea’s Kospi climbed 1%, among the strongest performers globally. Japan’s Nikkei 225 gained 0.9% even as the Japanese yen slipped toward its weakest level against the US dollar in 40 years.

The widening yield gap between US and Japanese government bonds, combined with the prospect of further Federal Reserve rate hikes, has placed additional pressure on the yen. Speculation is growing that Japan’s government may intervene to support the currency, though the country’s finance minister said only that officials were prepared to “respond appropriately whenever necessary.”