A stunning rise in Nvidia shares on Tuesday sent it to the top of the market, becoming the most valuable company on Wall Street. Meanwhile, stocks set new records after the latest signal that the US economy growth may slow down without craters.
The S&P 500 added 0.3%, setting an all-time high for the 31st time this year. The Nasdaq rose less than 0.1% to set its own record, while the Dow Jones Industrial Average gained 56 points, or 0.1%.
Under this calm market, Nvidia has become a star again. It rose again, this time by 3.5%. This was the strongest force that pushed the S&P 500 higher again. And this again raised its total market value above $3 trillion.
He took the top spot on Wall Street from Microsoft, which traded the crown with Apple after they snatched it from past titans such as Exxon Mobil and cigarette maker Philip Morris.
Microsoft and Apple have been at the forefront of Big Tech, which is a dominant force in the U.S. stock market after gaining strength from the digitization of the world. Nvidia is riding the wave of a more specific technology surge, this time in the field of artificial intelligence.
Chip Wars
Nvidia’s chips are helping advance artificial intelligence, which its proponents expect will change the world as much or more than the Internet, and demand for its chips has proven shockingly insatiable. Nvidia’s revenue typically triples every quarter, and its profits are growing at an even more breakneck pace. Its shares are up nearly 174% this year, and Nvidia alone accounted for nearly a third of the S&P 500’s total gain in the year through May.
Of course, the potential danger that a handful of superstars are responsible for much of the US stock market’s record run is a more fragile market. If more stocks participated, it could signal a healthier market.
Stocks as a whole saw some gains on Tuesday, helped by lower yields in the bond market. Treasury yields fell after a report showed U.S. retail sales returned to growth last month but remained below economists’ expectations.
This could be an encouraging sign for the Federal Reserve, which is trying to forcefully rebalance the economy. The Fed wants to slow the economy as much as possible by raising interest rates to bring inflation under control. The hope is that he will cut his key rate, which is at its highest level in two decades, in time to stop the slowdown and prevent a painful recession.
Hopes for lower interest rates
Following the release of retail sales data, traders are betting that the Federal Reserve will cut rates at least twice this year, according to CME Group. Fed officials themselves are generally targeting one or two cuts in 2024.
The yield on the 10-year Treasury note fell to 4.21% from 4.29% late Monday. The two-year yield, which is more closely in line with 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 bullish on stocks since fall 2021, with relatively little cash hidden and stock holdings heavy. Fewer managers are also calling for a “hard landing” when the economy falls into a severe recession.
The downside to Tuesday’s weaker-than-expected data is that it could be a warning signal that the main engine of the US economy, household spending, is cracking. In addition to the May figures, the US government also revised down retail sales figures for previous months.
Inflation is still high, even though it has slowed since its peak. low income households in particular, struggling to keep up with more expensive prices.
Shares of homebuilder Lennar fell 5% after co-CEO Stuart Miller said “challenging consumer sentiment” and fluctuating interest rates were testing the company. Its shares fell even though the company reported better profit for the latest quarter than analysts had expected.
Fisker shares more than halve to 2 cents after electric car maker files lawsuit Chapter 11. Bankruptcy protection. The company cited “various market and macroeconomic headwinds.”
On Wall Street’s side was La-Z-Boy, which jumped 19.4% after reporting better-than-expected earnings and revenue for its latest quarter. The furniture maker said the current quarter is also off to a good start, despite high interest rates holding back housing activity.
Shares of Silk Road Medical jumped 24% after Boston Scientific agreed to buy the medical device company in an all-cash deal, valuing it at about $1.26 billion, including cash. Boston Scientific added 0.2%.
Overall, the S&P 500 rose 13.80 points to 5,487.03. The Dow rose 56.76 to 38,834.86 and the Nasdaq rose 5.21 to 17,862.23.
On foreign stock markets, indices in Europe continued to recover after falling last week. The surprise election victory of far-right parties has raised concerns about the possibility of an increased debt burden, particularly for the French government.
France’s CAC 40 index rose 0.8% for the second time in a row.
In Asia, Japan’s Nikkei 225 rose 1%. Heavy weight Toyota Motor rose after its shareholders rejected a proposal to force Akio Toyoda, the grandson of the automaker’s founder, to step down as chairman.
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AP Business Writer Elaine Kurtenbach contributed.