NEW YORK (AP) A rebound for Nvidia supported a weakened Wall Street on Tuesday.
The S&P 500 rose 0.4% and neared its all-time high set a week earlier, while the Nasdaq Composite Index jumped 1.3% for its first gain in four days. Such strength occurred even as most stocks outside of Wall Street's frenzy around artificial intelligence technology were falling.
The Dow Jones Industrial Average, which does not count Nvidia among its members, lagged and fell 299 points, or 0.8%.
Nvidia rose 6.8%, and without the gain, the S&P 500 would have fallen into a loss for the day. Shares of the chip company ended a three-day losing streak where they had lost nearly 13% for their worst streak since 2022.
It's just a stock, but Nvidia has the power to move the S&P 500 as it has become one of the The biggest and most influential companies on Wall Street.
Voracious demand for Nvidias chips powering artificial intelligence applications has 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 recent struggles haven't caused too much concern, at least not yet. That's partly because Nvidia's 13% three-day decline was a trickle from its 1,000% rise previously since fall 2022. Market observers were also hoping that more stocks would participate in the rise of the stock market rather than just Nvidia and a handful of stocks. AI winners.
That's what happened Monday, when banks, oil companies and other stocks outside the AI boom rallied as Nvidia slumped. But it could be difficult for these stocks to continue to take over from AI darlings, depending on how much growth in the U.S. economy slows.
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 8% after saying new pool construction 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. Three out of four stocks in the index fell.
SolarEdge Technologies fell 20.6% 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 0.4%.
Generally speaking, sales to retailers across the country have experienced ups and downs recently as companies highlight how low-income customers are struggling to cope with ever-rising prices. THE the job market, however, still looks solid. 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 8.7% 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 turn out to be even better.
Overall, the S&P 500 rose 21.43 points to 5,469.30. The Dow Jones fell 299.05 to 39,112.16 and the Nasdaq composite jumped 220.84 to 17,717.65.
In the bond market, Treasury yields remained relatively stable. The 10-year Treasury yield remained at 4.23%, where it stood Monday 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 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. 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 degenerate 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 betting it will arrive in September. But stocks don't always go up afterward. Since 1974, the S&P 500 index has fallen an average of about 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 slowed enough to cut rates, that could be good for stocks. But if it's reduced because the economy is heading into a recession, that's different.
In foreign stock markets, indices fell in much of Europe and rose in much of Asia.
AP writers Matt Ott and Zimo Zhong contributed.
