Stock market today: Nvidia's rebound amounts to masking the losses of a large part of Wall Street

NEW YORK (AP) A rebound in Nvidia helps keep U.S. indexes near Tuesday's record highs.

The S&P 500 was virtually unchanged in afternoon trading and is below its all-time high set a week earlier. Nvidia's rebound helped the Nasdaq Composite Index jump 0.7% and head for its first gain in four days. The Dow Jones Industrial Average, which does not count Nvidia among its members, was lagging and down 360 points, or 0.9%, as of 1:02 p.m. Eastern Time.

Nvidia is up 5.3% and on track to snap a three-day losing streak in which it has lost nearly 13%, its worst streak since 2022. That's just one stock, but Nvidia has the power to rock the S&P 500 as it has become one of the largest and most influential stocks on Wall Street.

Voracious demand for Nvidias chips to power artificial intelligence applications has been a key reason U.S. stock markets have hit record highs recently, even as economic growth slows under the weight of 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 recent struggles haven't caused too much concern, at least not yet, as market watchers were hoping more stocks would participate in the stock market's rally rather than a handful of AI winners.

That's what happened on Monday, when banks, oil companies and other stocks outside the AI ​​boom rallied as Nvidia slumped again. But it could prove difficult for these stocks to continue to offset the slowdown in AI favorites, given the slowing growth of the U.S. economy.

In financial markets, the focus is starting to shift toward growth and away from inflation and interest rates alone, according to Michael Wilson and other Morgan Stanley strategists.

Pool Corp., a distributor of swimming pool supplies, fell 6.8% after saying construction of new pools was down amid cautious consumer spending on big-ticket items and cutting its financial forecast for the 'year.

It was the worst performer in the S&P 500, but Pool wasn't alone. About 80% of stocks in the index were down.

SolarEdge Technologies fell 21.1% after saying a customer owed it $11.4 million filed for Chapter 7 bankruptcy, raising questions about how much the solar company can collect and when. Smaller companies in the Russell 2000 index also fell 0.6%.

Generally speaking, sales at retailers across the country have been up and down recently, with companies highlighting how low-income customers are struggling to keep up with ever-rising prices. The job market, however, still appears generally strong. A report released Tuesday also showed that U.S. consumer confidence fell this month, but not as much as economists had hoped.

Higher-income households appear to be doing better and are booking trips on cruise ships. Carnival rose 9.4% after raising its profit forecast for 2024. The cruise line said bookings for the rest of the year were the best on record in terms of price and occupancy. And bookings for next year could be even better.

In the bond market, Treasury yields remained relatively stable. The yield on the 10-year Treasury note rose slightly to 4.25% from 4.23% late Monday.

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. The hope on Wall Street is that the Fed will cut interest rates at exactly the right time. If we wait too long, the economic slowdown could turn into a recession. If it is too early, inflation could reaccelerate.

Investors have been eagerly awaiting the first interest rate cut, and many traders are counting on it arriving in September. But stocks don't always go up afterward. Historically, the S&P 500 fell an average of 20% within 250 days of the first rate cut, according to the Wells Fargo Investment Institute.

That's because the reason the Fed is cutting rates is important. If this happens simply because inflation has become low enough to cut rates, that could be good for stocks. But if it's reduced because the economy suddenly heads into a recession, that's different.

In foreign stock markets, indices fell in much of Europe and rose in much of Asia.

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AP writers Matt Ott and Zimo Zhong contributed.