NEW YORK (AP) — NVIDIA That helped support Wall Street, which weakened on Tuesday.
The S&P 500 rose 0.4%, nearing the all-time high it hit a week ago, while the Nasdaq Composite rose 1.3%, its first gain in four days.The strength came amid a selloff in most stocks outside of Wall Street’s enthusiasm for artificial intelligence technology.
The Dow Jones Industrial Average, which does not include Nvidia, lagged behind, falling 299 points, or 0.8%.
Nvidia rose 6.8%, but for that gain the S&P 500 would have fallen for the day. The semiconductor company’s shares snapped a three-day losing streak that included a nearly 13% drop, its worst since 2022.
Although it’s just one stock, Nvidia has the power to influence the S&P 500. Because the company Wall Street’s largest and most influential firm.
Voracious Demand Nvidia’s chips Powering artificial intelligence applications It has been The big reason Despite slowing economic growth, the U.S. stock market has recently been breaking records. Weight slows it down High interest rates are to blame. But the AI boom has been so feverish that it’s raising concerns about a stock market bubble and investors’ expectations being too high.
AI is already giving Wall Street momentum. Read more from AP reporter Seth Stell.
Nvidia’s recent struggles aren’t causing too much concern, at least for now. That’s in part because the company’s 13% three-day drop in stock price was a modest drop compared with the prior 1,000% rally since the fall of 2022. Market watchers are also hoping to see more stocks join a surging stock market beyond just Nvidia and a handful of AI winners.
That’s exactly what happened on Monday, as banks, oil companies and other stocks outside the AI boom rose while Nvidia fell. But they may have a hard time staying on the AI bandwagon, depending on how much U.S. economic growth slows.
In financial markets, focus is beginning to shift from inflation and interest rates to growth, according to Morgan Stanley’s Michael Wilson and other strategists.
Pool Corp.’s shares fell 8 percent after the company cut its earnings forecast for this year, saying new pool construction was declining as consumers were being cautious about spending on big-ticket items.
While it was the worst-performing stock in the S&P 500, Poole wasn’t alone: Three of the four stocks in the index fell.
SolarEdge Technologies Inc. fell 20.6% after it said a customer owed $11.4 million filed for Chapter 7 bankruptcy protection, raising questions about when and how much the solar company will get to recoup. Smaller companies in the Russell 2000 Index also fell 0.4%.
Roughly speaking: Retailers nationwide Companies Low-income customers are struggling To keep up with still rising prices. Job marketBut they still look broadly solid.Tuesday’s report also showed that U.S. consumer confidence also fell this month, but not by as much as economists had expected.
High-income families appear to be on the mend as the economy improves and they’re booking trips on cruise ships. Carnival rose 8.7% after raising its 2024 profit forecast. The company said bookings for the rest of the year are at all-time highs, both in terms of prices and occupancy. And bookings for next year could be even better.
Overall, the S&P 500 rose 21.43 points to 5,469.30, the Dow lost 299.05 points to 39,112.16 and the Nasdaq Composite added 220.84 points to 17,717.65.
In the bond market, government bond yields remained relatively stable, with the 10-year Treasury yield remaining at 4.23%, the same as Monday’s closing price.
It has mostly fallen since hitting above 4.70% in late April, easing pressure on the stock market. Yields have been falling on hopes that inflation is slowing enough for the Federal Reserve to approve. lower key interest rates It’s scheduled for later this year.
The Federal Reserve has kept the federal funds rate at its highest level in more than 20 years, weighing on the economy. inflation It’s under control. Wall Street is hoping the Fed will cut interest rates at the right time. Wait too long and the economic slowdown could turn into a recession. Wait too soon and inflation could accelerate again.
Investors are eagerly awaiting the first rate cut, which many traders expect to come in September, but stocks don’t necessarily rally afterward: Since 1974, the S&P 500 has fallen an average of about 20% in the 250 days following the first rate cut, according to Wells Fargo Investment Institute.
That’s because why the Fed cuts rates matters: If inflation had simply slowed enough to warrant a cut, that might be good for stocks, but if it’s cutting rates because the economy is heading for a recession, that’s a different story.
In overseas stock markets, stock price indexes fell in many European countries, while stock price indexes rose in many Asian countries.
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AP writers Matt Ott and Jimmo Zhong contributed.
