NEW YORK (AP) — Nvidia Inc.’s stock surged to a record high Tuesday, making it Wall Street’s most valuable company, while stock indexes hit further records on the latest signs that U.S. economic growth may be slowing without a sharp drop.
The S&P 500 rose 0.3%, hitting its 31st all-time high this year, the Nasdaq Composite rose less than 0.1% to hit a record high and the Dow Jones Industrial Average added 56 points, or 0.1%.
Beneath the market’s calm surface, Nvidia was once again the star of the show. The company rose again, this time by 3.5%, once again becoming the most powerful driver of the S&P 500 upwards, and once again pushing its market capitalization past $3 trillion.
Apple has taken the top spot on Wall Street from Microsoft, which has repeatedly challenged Apple for the throne since taking the top spot from previous giants such as Exxon Mobil and tobacco maker Philip Morris.
Microsoft and Apple were the vanguard of Big Tech, which powered through the digital transformation of the world and became dominant forces on the U.S. stock market. Nvidia is riding the wave of rapid growth in a more specific technology, this time artificial intelligence.
Demand for Nvidia’s chips has proven surprisingly strong, as the company’s chips help develop AI, which backers hope will change the world as much as or even more than the internet. Nvidia’s revenue is tripling every quarter, and profits are soaring at an even more astounding pace. The company’s shares are up nearly 174% this year, and Nvidia alone accounted for nearly a third of the S&P 500’s gain in the 12 months through May.
Of course, the potential danger of having a handful of superstars driving most of the U.S. stock market’s record rally is that it makes the market more vulnerable. If more stocks were involved, that could be a sign of a healthier market.
Stocks broadly rose on Tuesday as yields in the bond market fell. Treasury yields fell after a report showed U.S. retail sales rose last month but still fell short of economists’ expectations.
That could be an encouraging signal to the Federal Reserve, which is trying to pull off a tough rebalancing of the economy. The Fed wants to keep interest rates high enough to slow the economy down enough to keep inflation in check, and is hoping to cut its key interest rate, which is at a 20-year high, just before it slides into a painful recession.
The retail sales figures have boosted traders’ expectations that the Federal Reserve will cut interest rates at least twice this year, according to CME Group data, and Fed officials themselves generally expect one or two rate cuts in 2024.
The yield on the 10-year Treasury note fell to 4.21% from Monday’s close of 4.29%. The yield on the two-year note, which more accurately reflects the Fed’s expectations, fell to 4.70% from 4.77%.
A Bank of America survey of global fund managers found they are the most optimistic about stocks they have been since the fall of 2021, with relatively few assets tucked away in cash and heavy allocations to equities. Fewer managers are also expecting a “hard landing” in which the economy falls into a deep recession.
The downside to Tuesday’s weaker-than-expected data is that it could be a warning signal that cracks are beginning to appear in household spending, the main engine of the U.S. economy. Along with the May figures, the U.S. government also revised down retail sales figures for past months.
Although inflation has slowed from its peak, it remains high, with low-income households in particular struggling to keep up with rising prices.
Shares of homebuilder Lennar Inc. fell 5% after co-chief executive Stuart Miller said “weaker consumer confidence” and fluctuating interest rates were challenging the company. The decline came even as the company reported profits for its latest quarter that beat analysts’ expectations.
Shares of electric car maker Fisker fell by more than half to 2 cents after the company filed for Chapter 11 bankruptcy protection, citing “a variety of market and macroeconomic headwinds.”
Among the winners on Wall Street was Ray Ze Boy, which reported better-than-expected profits and sales for the latest quarter, sending its shares up 19.4%. The furniture maker said a strong Memorial Day sale helped it get the current quarter off to a strong start, even as high interest rates have dampened home-dealing activity.
Boston Scientific shares rose 24% after the company agreed to buy medical device maker Silk Road Medical in an all-cash deal that values the deal at about $1.26 billion, including cash. Boston Scientific rose 0.2%.
Overall, the S&P 500 rose 13.80 points to 5,487.03, the Dow added 56.76 points to 38,834.86 and the Nasdaq Composite added 5.21 points to 17,862.23.
Abroad, European stock indexes continue to recover after crashing last week, when the surprise victory of a far-right party in an election that raised concerns about a possible rise in the government’s debt burden, particularly in France.
France’s CAC 40 rose 0.8%, its second consecutive annual increase.
In Asia, Japan’s Nikkei stock average rose 1 percent, with major automaker Toyota Motor Corp. rising after shareholders rejected a proposal to force Akio Toyoda, the grandson of the company’s founder, to step down from his role as chairman.
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AP Business Writer Elaine Kurtenbach contributed.
Stan Cho, The Associated Press
