Stock market today: Most Wall Street rallies, although Nvidia lags

NEW YORK (AP) Most U.S. stocks are higher Monday, but a further decline in Wall Street heavyweight Nvidia is keeping indexes in check.

The S&P 500 was up 0.2% in afternoon trading and nearing its record high set last week. The Dow Jones Industrial Average was up 319 points, or 0.8%, as of 12:51 p.m. Eastern Time, and the Nasdaq Composite Index was down 0.4%.

Stocks of oil and gas companies are leading a broad-based rally, where about 80% of S&P 500 stocks are up. Exxon Mobil rose 2.8% and oilfield services provider SLB rose 3.9% as oil prices approached their highest levels since April.

The S&P 500's gain would have been even greater without Nvidia's 4.7% decline. The chip company is heading for a three-day losing streak after soaring 1,000% since fall 2022. Nearly insatiable demand for Nvidia chips to power artificial intelligence applications has been one of the biggest reasons for the recent rise in the US stock market. even as economic growth slows under the weight of high interest rates.

The AI ​​boom has been so frenzied that it has sparked concerns about a possible stock market bubble and unrealistically high expectations from investors. Nvidias stock has fallen since briefly overtaking Microsoft as Wall Street's most valuable stock last week. He is coming off his first losing week in the last nine.

Because Nvidia has become so massive, the moves its shares make have extra weight on the S&P 500 and other indexes. It was by far the heaviest weight in the S&P 500 on Monday.

RXO jumped 23.3% after agreeing to buy freight brokerage business Coyote Logistics from UPS for nearly $1.03 billion. RXO said the deal would make it the third brokered transportation provider in North America. UPS, which bought Coyote in 2015 for $1.8 billion, rose 1.7%.

Under Armor swung from an initial loss to a 1.5% gain in its first trading after announcing it had agreed to pay $434 million to settle charges raised by shareholders related to its accounting and business practices. The athletic footwear and apparel company denied any wrongdoing as part of the settlement, but it also agreed to separate the roles of chairman and CEO for at least three years.

In the bond market, Treasury yields remained relatively stable. The 10-year Treasury yield has remained stable at 4.26% since Friday evening.

It is down from a peak of 4.70% in late April, which eased pressure on the stock market. Yields have fallen on hopes that inflation will slow enough to convince the Federal Reserve to cut its main interest rate later this year.

The Fed is keeping the federal funds rate at the highest level in more than 20 years, hoping to rein in the economy just enough to keep inflation in check.

Fed officials may be underestimating the extent of the slowdown in the U.S. economy, according to UBS economists led by Abigail Watt. They expect growth to slow to below an annualized rate of 2% in the first half of 2024, compared to 3.1% in the fourth quarter of 2023 a year earlier.

UBS economists say U.S. households in the bottom 40% of the country by income are now depleting their savings after completely depleting the cushions they built during and immediately after the pandemic. That could further slow retail sales, which have been up and down as companies highlight how lower-income customers often struggle to keep up.

Wall Street is actually hoping for a slowdown in the economy, which would ease upward pressure on inflation and push the Federal Reserve to cut rates. David Mericle, an economist at Goldman Sachs, said a rate cut could happen as soon as September if inflation reports, like Friday's, turn out as expected.

The Fed just needs to make sure it cuts interest rates at the right time. If we wait too long, the economic slowdown could degenerate into a recession. If it is too early, inflation could reaccelerate.

In foreign stock markets, indexes rose in much of Europe after falling mainly in Asia.

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AP writers Matt Ott and Zimo Zhong contributed.