Stock Market Today: Most of Wall Street is Up, but Nvidia Tumbles Again as AI Craze Cools Down

NEW YORK

New slide for Wall Street heavyweights Nvidia kept U.S. indexes mixed on Monday, even as the majority of stocks rebounded.

The Standard & Poors 500 index slipped 0.3%, further away from its record set last week. Declines in Nvidia and other winners of Wall Street's artificial intelligence boom sent the Nasdaq Composite Index down 1.1%, while the Dow Jones Industrial Average rose 0.7%.

Stocks of oil and gas companies were among the strongest in the market, as 7 out of 10 stocks in the S&P 500 rose. Exxon Mobil climbed 3%, and oilfield services provider SLB gained 4%, as oil prices approached their highest levels since April.

Financial companies were also strong. JPMorgan Chase added 1.3% and Wells Fargo climbed 1.6% ahead of results to be released later in the week for the Federal Reserve's tests of how big banks would perform in a recession.

But declines in a handful of top stocks offset all those gains, and the spotlight was particularly on Nvidia's 6.7% drop. This is a third consecutive decline for the chipmaker, which had climbed 1,000% since fall 2022.

An almost insatiable demand for Nvidias chips powering AI applications have been a big reason as U.S. stock markets have recently hit record highs, even as the economy grows slows down under the weight high interest rates. But the AI ​​boom has been so frenzied that it has sparked concerns about a possible stock market bubble and unrealistically high expectations from investors.

Nvidia's stock has been in decline since briefly overtaking Microsoft as Wall Street's most valuable stock last week, and it has fallen nearly 13% in just three days. Because Nvidia has become so massive, its stock moves carry extra weight on the S&P 500 and other indexes. It was by far the heaviest weight on the S&P 500 on Monday.

Other AI beneficiaries have also given up some of their fantastic gains. Super Micro Computer fell 8.6% to bring its gain for the year below 200%, to 190.9%.

Such rotation among stocks could actually be a sign of good health for the market, provided it can stay near its record highs. Market watchers are concerned that recently Nvidia and a handful of other companies are responsible for much of the S&P 500's returns. They would prefer a market in which many stocks participate in the gains.

RXO jumped 23% after agreed to purchase the Coyote Logistics UPS's freight brokerage business worth 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 1.5%.

Under Armor swung from an initial loss to a 2% gain after announcing it 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 also agreed to separate the roles of chairman and CEO for at least three years.

Overall, the S&P 500 fell 16.75 points to 5,447.87. The Dow Jones rose 260.88 points to 38,411.21 and the Nasdaq Composite Index fell 192.54 points to 17,496.82.

In the bond market, Treasury yields eased slightly. The 10-year Treasury yield fell to 4.23% from 4.26% 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 Fed to lowered 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 inflation under control.

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 depleting their savings after depleting the cushions they had built during the pandemic. This could still slowdown in retail saleswhich have seen rises and falls as companies emphasize how low-income clients often struggle to be continued.

Wall Street is hoping for a slowdown in the economy, which would ease upward pressure on inflation and push the Fed to cut rates. David Mericle, an economist at Goldman Sachs, said a rate cut could happen as early as September if inflation reports such as 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 turn 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.

Choé writing for the Associated Press