Stan Cho, The Associated Press
2 hours ago
The New York Stock Exchange (right) is seen in this photo looking east from Wall Street, Wednesday, June 5, 2024. Global stock prices were mixed as investors considered data highlighting a slowdown in the U.S. economy, with both positive and negative implications for Wall Street. (AP Photo/Peter Morgan, File)
NEW YORK (AP) — The S&P 500 and Nasdaq Composite Indexes are climbing toward all-time highs on Wednesday as technology stocks continue to rally.
The S&P 500 was up 0.5% in midday trading, just below the all-time high it reached two weeks ago. The Nasdaq Composite was up 1.1% as of 11 a.m. Eastern time and on track to hit a new all-time high. The Dow Jones Industrial Average underperformed the market, down 63 points, or 0.2%.
Better-than-expected profit reports from tech companies lifted the market, with Hewlett Packard Enterprise Co. shares rising 12.4% after the company reported better-than-expected results on strong sales of its artificial intelligence systems. The company also raised its full-year earnings forecast.
Wall Street’s enthusiasm for AI has sent stocks soaring, with little regard for the broader economy or interest rates. Nvidia rose another 3%, bringing its gains to 142.1% so far this year. With its chips powering much of the development, the company has become the poster child for the AI ​​rush and the biggest driver of the S&P 500 Index’s dominance. Nvidia’s market capitalization is approaching $3 trillion.
Other big tech stocks also lifted the market, with Broadcom Inc. up 3.5% and Microsoft Corp. up 0.8%. Cybersecurity company CrowdStrike Inc. rose 5.9% after reporting better-than-expected profits and revenue in its most recent quarter.
Those products helped offset a 4.6% decline at Dollar Tree, where profit was in line with analysts’ expectations but sales fell slightly short. The company also said it was considering selling or spinning off its Family Dollar business.
The retail sector as a whole highlights the challenges facing lower-income American families as they try to keep up with still-high inflation.
In the bond market, Treasury yields were relatively stable following mixed data on the economy. A report said business in real estate, health care and other U.S. service sectors turned to growth last month, beating economists’ expectations. Perhaps more importantly for Wall Street, the Institute for Supply Management report also said price growth slowed in May from the previous month.
A separate report in the morning suggested hiring at non-government U.S. employers slowed more than expected last month.
Stocks have been generally volatile recently amid reports that U.S. economic growth is slowing under the weight of high interest rates. Wall Street is actually hoping for such a slowdown, because it could tame inflation and prompt the Federal Reserve to make some much-needed interest rate cuts. But it also increases the chances that it could go too far and tip the economy into a recession, ultimately hurting stock prices.
Treasury yields fell sharply as weaker-than-expected economic reports raised hopes of upcoming interest rate cuts by the Federal Reserve.
The yield on the 10-year Treasury note edged down further to 4.31%, down from Tuesday’s close of 4.33%, but well below the 4.60% recorded a week ago.
The next big move for Treasury yields and Wall Street overall could come on Friday, when the U.S. government releases its monthly jobs report. The report is much more comprehensive than ADP’s report on Wednesday, which focused only on the private sector, and economists expect Friday’s data to show a slight increase in overall employment. There is still hope that job market growth will slow, but not enough to lead to widespread layoffs.
The worst-case scenario for markets is likely to be if data on the job market and other parts of the economy turns out to be stronger than expected, which could prompt the Fed to consider further hikes to its key interest rate, which would put further strain on the economy and investment prices.The federal funds rate is at its highest in more than 20 years, according to JJ Kinahan, CEO of IG North America.
But Kinahan said he considered this scenario less likely than others.
Overseas stock markets saw stock indexes rise across much of Europe as investors expect the European Central Bank to cut interest rates when it meets on Thursday amid concerns about an economic slowdown.
Stocks fell in much of Asia, dropping 0.9 percent in Tokyo and 0.8 percent in Seoul, but rising 1 percent in the latter.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
