NEW YORK (AP) — U.S. stocks were mostly higher Wednesday, putting Wall Street on track for more records.
The S&P 500 was up 0.2% in morning trading, nearing its 37th all-time high this year. The Dow Jones Industrial Average was down one point, or less than 0.1%, as of 10:50 a.m. Eastern time, while the Nasdaq Composite was 0.4% above its all-time high.
Big technology companies are leading the way, which has become commonplace on Wall Street: U.S.-listed shares of Taiwan Semiconductor Corp. rose 2.5% after the company said its June revenue rose about 33% from a year earlier.
Taiwan Semiconductor Co. (TSMC) makes chips such as Nvidia, which has been driving the business world’s rapid move into artificial intelligence technology. The promise of huge future profits from AI has propelled Nvidia in particular to extraordinary heights over the past year, with the stock rising another 2.4% on Wednesday, bringing its gains so far this year to 171.5%. Nvidia has once again been the most powerful driver of the S&P 500.
The hype around AI is a key reason why the U.S. stock market has risen to record highs despite slowing economic growth and tightening pressures on low-income households, as well as growing hopes that inflation will slow enough for the Federal Reserve to enact a much-needed interest rate cut later this year.
Federal Reserve Chairman Jerome Powell returned to Capitol Hill to testify about interest rates, where he reiterated his comments from the previous day, saying he remains aware of the risks of waiting too long to cut rates.
The Fed is trying to walk a tricky tightrope between keeping interest rates high to slow the economy and keep inflation at bay, while not going too far and triggering a recession. Many on Wall Street expect the Fed to start cutting its key interest rate in September, lowering it from the highest level in more than two decades where it has been held for nearly a year. But traders have a long history of calling for rate cuts too early.
Powell endorsed inflation readings that are recovering from weakness earlier this year, but reiterated that the Fed still lacks confidence that inflation is falling sustainably toward its 2 percent target.
“Our confidence will grow as we get more and better data,” Powell said.
The yield on the 10-year Treasury note fell slightly to 4.29% from 4.30% at Tuesday’s close and from 4.70% since April. The move since the spring has been big for the bond market and has supported stock prices.
The yield on the two-year Treasury note, which is volatile due to expectations of Fed action, edged down to 4.61 percent from Tuesday’s close of 4.62 percent.
A report due on Thursday could spark more dramatic swings in the bond and stock markets. That’s the day the U.S. government releases its latest monthly inflation numbers. Economists expect them to show that the prices U.S. consumers paid for food, airfare and everything else rose 3.1% in June from a year earlier, slightly lower than May’s 3.3% inflation rate.
Later this week also marks the unofficial start of the latest earnings reporting season, with Delta Air Lines, JPMorgan Chase and others set to announce how much profit they made in the April-June spring, and Wall Street hoping S&P 500 companies will post their first big gains in more than two years.
Smart Global Holdings Ltd., a technology company with businesses in computing, memory and LED, reported profit and revenue for the latest quarter that beat analyst expectations, sending its shares up 18%.
Leading the declines on Wall Street was RegalZoom, down 25.7% after the company announced that CEO Dan Warnikov would be leaving the company and stepping down from the board. The company also lowered its full-year revenue forecast.
Among overseas stock markets, Japan’s Nikkei rose 0.6%, closing at a record high again. The AI craze has boosted Japanese tech stocks, helping the Nikkei rise 25% so far this year, outpacing the U.S. stock market. Japanese exporters are also benefiting from the weak yen against the dollar, which could boost profits.
European stock indexes rose while other Asian markets were mixed.
___
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
Stan Cho, The Associated Press
