Financial Markets                      12/12 09:28

   

   NEW YORK (AP) -- Broadcom is leading artificial-intelligence stocks lower on 
Friday, but other areas of the market that used to get left behind by Big Tech 
are picking up some of the slack. That's keeping Wall Street indexes near their 
record heights.

   The S&P 500 slipped 0.2% in morning trading, coming off its latest all-time 
high, while the weakness for tech had the Nasdaq composite down 0.4%, as of 10 
a.m. Eastern time. The majority of stocks on Wall Street were nevertheless 
rising, and the Dow Jones Industrial Average added 110 points, or 0.2%, to its 
own record.

   Broadcom fell 8.8% even though the chip company reported a stronger profit 
for the latest quarter than analysts expected. Analysts called the performance 
solid, and CEO Hock Tan said strong 74% growth in AI semiconductor revenue 
helped lead the way.

   But investors may have been concerned with some of Broadcom's financial 
forecasts, including how much profit it can squeeze out of each $1 of revenue. 
The AI heavyweight may also have simply run out of momentum after its stock 
came into the day with a surge of 75.3% for the year so far, more than 
quadruple the S&P 500's gain.

   Broadcom's stumble came a day after Oracle plunged nearly 11% despite 
likewise reporting a bigger profit for the latest quarter than analysts 
expected.

   Doubts remain about whether all the spending that Oracle is doing on AI 
technology will end up being worth it. Such questions are weighing on the AI 
industry broadly, even as many billions of dollars continue to flow in.

   It's a return toward Earth for AI superstars, which earlier had been the 
main engine sending Wall Street higher. Other stocks that used to struggle with 
uncertainty about the U.S. economy's strength and what the Federal Reserve will 
do with interest rates, meanwhile, are climbing.

   The smallest U.S. stocks in the Russell 2000 index have leaped 2.6% so far 
this week, for example. That's much better than the 0.4% dip for the Nasdaq 
composite, which is packed with tech stocks.

   The blue chip stocks in the Dow Jones Industrial Average, which has much 
less of an emphasis on tech, have also been beating the rest of the market. 
Visa was again one of the strongest forces lifting the Dow on Friday after 
rising 1%.

   Now, investors are feeling more optimistic about interest rates. The Fed 
earlier this week cut its main interest rate for the third time this year and 
indicated another cut may be ahead in 2026. Wall Street loves lower rates 
because they can boost the economy and send prices for investments higher, even 
if they potentially make inflation worse.

   The Fed's chair, Jerome Powell, did hint on Wednesday that interest rates 
may be on hold for a while. But he helped soothe nerves when his comments 
appeared less harsh than some investors expected in shutting off the 
possibility of more cuts in 2026.

   Stocks of travel-related companies were strong on Friday. Oil prices have 
eased this week, which should help trim their bills, and hopes are rising that 
easier interest rates will support the economy and encourage more people to 
take trips.

   Norwegian Cruise Line steamed 3.4% higher for one of the market's bigger 
gains, while Southwest Airlines climbed 2.2%.

   Lululemon Athletica jumped 12.6% for the biggest gain in the S&P 500 after 
reporting better profit and revenue for the three months through Nov. 2 than 
analysts expected. It also said its CEO, Calvin McDonald, plans to step down at 
the end of January following pressure to boost revenue.

   In stock markets abroad, indexes rose across most of Europe and Asia.

   Stocks jumped 1.7% in Hong Kong and rose 1.4% in Tokyo for two of the 
world's bigger gains.

   In the bond market, Treasury yields rose. The yield on the 10-year Treasury 
climbed to 4.18% from 4.14% late Thursday.

   ___

   AP Writers Teresa Cerojano and Matt Ott contributed.

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