Stock market today: A dip for Nvidia weighs on Wall Street, and indexes edge back from records
NEW YORK (AP) — U.S. stock indexes are edging back from their records Thursday, weighed down by a dip for Wall Street darling Nvidia, following a mixed set of reports on the economy.
The S&P 500 was down 0.2% from its all-time high set before Wednesday’s Juneteenth holiday for financial markets. The Nasdaq composite was also pulling back from its record and down 0.7%, as of 2:45 p.m. Eastern time. The Dow Jones Industrial Average was doing better with a gain of 367 points, or 0.9%.
Nvidia gave up an early gain and fell 2.4% to put at risk an eight-week winning streak. The chip company has been the main beneficiary of Wall Street’s frenzy around artificial-intelligence technology, and it supplanted Microsoft on Tuesday to become the most valuable company in the market.
Nvidia’s chips are helping to power the move into AI, which proponents see producing explosive growth in productivity and profits, and it’s already up 167% this year after more than tripling last year.
The gains for Nvidia and other AI winners have helped prop up the stock market despite some weakness in the U.S. economy. High interest rates meant to grind down inflation have hurt the housing market and manufacturing in particular, while lower-income households are showing signs of struggling to keep up with still-rising prices.
Winnebago Industries, for example, has been introducing “economical” trailers to attract customers amid “inconsistent retail patterns.” But its profit and revenue for the latest quarter fell short of analysts’ expectations. Shares of the maker of motorhomes and pontoons fell 3.8%.
In a show of how powerful AI can be, Accenture rose 7% even though the consulting and professional-services company reported weaker profit and revenue for the latest quarter than expected. In its earnings report, it highlighted how it won over $900 million in new bookings for generative AI to bring the total for its last three quarters to $2 billion.
The supernova for AI stocks has helped mask some weakness underneath the surface in the market. That can be a worrying signal for market watchers, who would prefer to see a large number of companies pushing the market higher instead of just a handful.
“It has been common in past cycles, as the stock market is coming into a meaningful top, that the biggest growth names are the ones carrying the load,” according to Scott Wren, senior global market strategist at Wells Fargo Investment Institute,
Treasury yields ticked higher in the bond market following a spate of mixed reports on the economy. The number of U.S. workers filing for unemployment benefits eased last week, but not by as much as economists expected. A separate report said manufacturing in the mid-Atlantic is growing, but not as quickly as economists thought. Home builders, meanwhile, broke ground on fewer new homes last month than expected.
The hope on Wall Street is actually for a slowdown in the U.S. economy’s growth. That could help keep a lid on inflationary pressures and convince the Federal Reserve to cut its main interest rate later this year. Such a cut would release pressure on the economy and boost investment prices.
Fed officials have indicated they could cut their main interest rate once or twice this year, down from its highest level in more than 20 years. Many traders on Wall Street, meanwhile, are expecting two or more cuts, according to data from CME Group.
The yield on the 10-year Treasury climbed to 4.24% from 4.22% late Tuesday. The two-year yield, which more closely tracks expectations for the Fed, rose more modestly to 4.72% from 4.71%.
Some other central banks have already begun removing the brakes from their economies.
The Swiss National Bank cuts its main rate on Thursday. The Bank of England, though, kept its main rate steady.
Stock indexes rose across much of Europe following the moves. The French CAC 40 gained 1.3% to recoup more of its losses from last week following jolting results from elections. Asian indexes were mixed.
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AP Writer Zimo Zhong contributed.