Financial Markets                      11/21 09:38

   

   NEW YORK (AP) -- Wall Street seems to be holding steadier on Friday, for now 
at least, following weeks of scary swings driven in part by worries that stars 
like AI stocks and cryptocurrencies shot too high.

   The S&P 500 rose 0.4% in morning trading. The Dow Jones Industrial Average 
was up 216 points, or 0.5%, as of 10:05 a.m. Eastern time, and the Nasdaq 
composite was 0.4% higher.

   Stocks appeared to get a boost from a speech by the president of the Federal 
Reserve Bank of New York. Markets perked up immediately after John Williams 
told a conference in Chile that he sees "room for a further adjustment" in the 
near term for interest rates.

   That could indicate he may vote for another cut to interest rates in 
December. What the Fed does with rates is critical for the stock market because 
prices ran to records through last month partly because of expectations for a 
series of invigorating cuts by the central bank.

   But a gain for the U.S. stock market in the morning guarantees nothing, as 
Thursday's violent pivot showed.

   The market began that day with a surge after Nvidia seemed to tamp down 
worries about a potential bubble for stocks riding the mania around 
artificial-intelligence technology. But it quickly gave up all of it and 
dropped to a sharp loss for its biggest reversal since April, when President 
Donald Trump shocked financial markets with his "Liberation Day" tariffs.

   Despite the strong profit report from Nvidia, whose chips are powering the 
move into AI and are proving indispensable for many buyers, worries are still 
hanging around about the longer term. Will all those AI chips and data centers 
that Amazon, Meta Platforms and other companies are paying for actually turn 
into big profits and productivity eventually? If not, some investors fear, all 
the investment won't be worth it.

   AI-linked stocks were still skittish on Friday. Nvidia went from an initial 
gain to a dip of 0.7%, for example. Palantir Technologies also bounced between 
gains and losses following its 5.8% slide from the day before. Proponents are 
still professing their belief in a revolution for the economy because of AI, 
while critics say stock prices are simply too high and frenzied.

   Other big swings also continued underneath the market's surface. Bitcoin 
briefly plunged below $81,000, before pulling back toward $85,000. That's down 
from nearly $125,000 last month, and it's back to where it was in April, when 
markets were shaking because of Trump's tariffs.

   Helping to lift Wall Street, meanwhile, were several retailers. Gap jumped 
6.6% after the apparel company reported a stronger profit for the latest 
quarter than analysts expected. CEO Richard Dickson said it saw strong sales 
trends at each of its Old Navy, Gap and Banana Republic brands.

   Ross Stores rose 5.4% after it likewise delivered a better profit than 
expected. CEO Jim Conroy said it saw broad-based growth during the quarter and 
raised the company's forecast for an important measure of sales during the 
holiday shopping season.

   In the bond market, Treasury yields eased. Following Williams' speech, 
traders were betting on a 73% probability of a December cut, up sharply from 
39% a day before, according to data from CME Group. That helped send the yield 
on the 10-year Treasury down to 4.06% from 4.10% late Thursday.

   The Fed has already cut rates twice this year to shore up the slowing job 
market. But lower rates can worsen inflation, which has stubbornly remained 
above the Fed's 2% target. That, along with delays for several important 
updates on the economy because of the U.S. government's earlier shutdown, 
raised doubts about whether the Fed will cut again in December.

   Treasury yields edged further down after a report from the University of 
Michigan said that U.S. consumers' expectations for inflation in the coming 
year and in the longer term aren't as bad as they were a month before. That 
could give the Fed more leeway to cut rates, because increasing expectations of 
inflation can lead to a vicious cycle that only worsens it.

   In stock markets abroad, indexes were mixed in Europe after markets tumbled 
in Asia following Wall Street's stunning reversal.

   Japan's Nikkei 225 fell 2.4%, and South Korea's Kospi dropped 3.8% for two 
of the larger losses.

   ___

   AP Writers Teresa Cerojano and Matt Ott contributed.

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