Stock market today: Most of Wall Street falls, but hopes for AI and rates keep indexes near records

NEW YORK — Most U.S. stocks were lower Thursday following mixed economic data, including the latest encouraging update on inflationbut hopes of an upcoming interest rate cut and Wall Street's continued frenzy over artificial intelligence technology are keeping indexes near record highs.

THE&The P 500 was down 0.1% in morning trading, a day after hitting an all-time high. The Dow Jones Industrial Average was down 257 points, or 0.7%, as of 10:40 a.m. Eastern Time. The Nasdaq Composite Index added 0.3% to its own record.

Treasury yields fell again in the bond market as belief grew that inflation was slowing enough to lead the Federal Reserve to cut interest rates later this year.

A report showed that inflation at the wholesale level was not as bad as economists expected. Prices paid by wholesalers actually fell from April to May, when economists had forecast a rise.

This followed, surprisingly encouraging update on inflation at the consumer level published Wednesday. Federal Reserve Chairman Jerome Powell called the report encouraging and said policymakers need more such data before lowering their key interest rate from the most punitive level in two decades.

High interest rates have weighed on certain sectors of the economy, particularly manufacturing. A separate report released Thursday showed More and more American workers are filing for unemployment last week than economists expected, although that figure remains low by historical standards.

The hope on Wall Street is that growth in the labor market and economy continues to slow to reduce inflationary pressure, but not so much as to create a deep recession.

Companies whose earnings are most closely tied to the strength of the economy were lagging the market Thursday following the reports.

Dave & Busters Entertainment fell 12.2% after reporting larger-than-expected profit and revenue declines for the latest quarter, citing a complex macroeconomic environment among other reasons. Other companies have recently detailed a breakdown among their customers, where low-income households are in difficulty to cope with persistently high inflation.

Some companies have been able to soar despite pressures on the economy from a continued frenzy around artificial intelligence technology.

Broadcom jumped 13.3% after the semiconductor company reported higher profit than analysts expected for the latest quarter, helped once again by demand for AI. It also raised its revenue forecast for this year.

Broadcoms' stock price has soared so high, to around $1,700, that it will soon offer nine shares for every one that investors already own, hoping to drive the price down and make it more affordable . It follows a similar approach from Nvidiawhich has become the poster child of the AI ​​rush and has seen its total market value surpass $3 trillion.

Tesla rose 2.9% after CEO Elon Musk said early voting results indicated shareholders were about to approve his salary package. Without it, Musk had threatened to hand over AI research to one of his other companies.

On the bond market, the yield on 10-year Treasury bills fell to 4.28% from 4.32% on Wednesday evening and 4.60% at the end of last month. The two-year yield, which moves more in line with Fed expectations, fell to 4.71% from 4.76%.

Fed officials are mostly considering one or two interest rate cuts this year, and traders are hoping that could start as early as September, according to CME Group data. Such cuts would ease pressure on the economy and boost all kinds of investment prices.

In foreign stock markets, indices fell across much of Europe as sector leaders Group of Seven The major industrialized nations gathered in Italy. The continent is still feeling the effects of European Parliament elections which saw a surge in support for the far right in countries like France and Germany.

The French CAC 40 fell 1.9% and the German DAX 1.7%.

In Asia, Japan's Nikkei 225 index slipped 0.4% ahead of the Japanese central bank's interest rate decision on Friday. Indexes rose in Seoul and Hong Kong.

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AP Business writers Yuri Kageyama and Matt Ott contributed.