NEW YORK (AP) — U.S. stocks edged up to more records following the latest signal that the economy’s growth may be slowing without cratering, while Nvidia continued its rocket ride upward to become Wall Street’s most valuable company. The S&P 500 rose 0.3% Tuesday, hitting another all-time high. The Dow Jones Industrial Average edged up 0.1%, and the Nasdaq composite edged higher to another record. Nvidia climbed to top Microsoft and become the largest U.S. stock by market value at over $3 trillion. Treasury yields fell in the bond market after a report showed sales at retailers returned to growth last month but remained below economists’ expectations.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — The staggering run for Nvidia's stock carried it to the market's mountaintop Tuesday, becoming the most valuable company on Wall Street, while stocks broadly drifted around their records following the latest signal that the economy’s growth may be slowing without cratering.
The S&P 500 rose 0.1% a day after setting an all-time high for the 30th time this year. The Dow Jones Industrial Average was down 20 points, or 0.1%, with less than an hour remaining in trading, while the Nasdaq composite was roughly flat.
Underneath that calm market surface, Nvidia was the star, again. It rose again, this time up 3.7%. It was the strongest force pushing the S&P 500 upward, again. And it lifted its total market value further above $3 trillion, again.
It usurped the top spot on Wall Street, which Microsoft and Apple have been trading back and forth recently. They were at the vanguard of Big Tech, which has come to dominate the U.S. stock market after amassing strength through the digitization of the world. Nvidia is riding the wave of a more specific tech surge, this time in artificial intelligence.
Nvidia's chips are helping to develop AI, which proponents expect to change the world as much or more than the internet, and demand for its chips has proven to be more voracious than even the most optimistic forecasts. Nvidia's revenue routinely triples every quarter, and its profit is rocketing at even more breathtaking rates. Its stock is up 174.2% this year. In the S&P 500, Nvidia is behind only another company that's also been caught up in the AI frenzy, Super Micro Computer.
Of course, the danger of having a handful of superstars responsible for most of the U.S. stock market's run to records is that it results in a more fragile market. One where more stocks were participating could be a signal of a healthier market.
Stocks broadly got some lift from easing yields in the bond market on Tuesday. Treasury yields fell after a report showed sales at U.S. retailers returned to growth last month but remained below economists’ expectations.
That could be an encouraging signal for the Federal Reserve, which is trying to pull off a tough balancing act for the economy. The Fed wants to slow the economy by just enough through high interest rates to get inflation under control. The hope is that it will cut its main rate, which is at its highest level in two decades, in time so that the slowdown stops short of a painful recession.
Following the retail sales data’s release, bets built among traders that the Federal Reserve will cut rates at least once this year and possibly twice, according to data from CME Group. Fed officials themselves are largely penciling in one or two cuts in 2024.
The yield on the 10-year Treasury fell to 4.21% from 4.29% late Monday. The two-year yield, which more closely tracks expectations for the Fed, fell even more. It dropped to 4.70% from 4.77%.
A survey of global fund managers by Bank of America showed they're the most optimistic about stocks since the autumn of 2021, with relatively little hiding out in cash and allocations heavy to stocks. Fewer managers are also calling for a “hard landing” where the economy tumbles into a bad recession.
Of course, the downside of Tuesday's weaker-than-expected data could be that it's a warning signal that the main engine of the U.S. economy, spending by households, is cracking. Alongside May's numbers, the U.S. government also revised down figures for retail sales in prior months.
Inflation is still high, even if it's slowed since its peak, and lower-income households in particular are struggling to keep up with the more expensive prices.
Lennar, a homebuilder, fell 5% after co-CEO Stuart Miller said “challenged consumer sentiment” and swings in interest rates are testing the company. Its stock fell even though it reported better profit for the latest quarter than analysts expected.
Shares of Fisker plunged 50.6% to 2 cents after the electric-vehicle maker filed for Chapter 11 bankruptcy protection. The company cited “various market and macroeconomic headwinds.”
On the winning side of Wall Street was La-Z-Boy, which jumped 19.3% after reporting stronger profit and revenue for the latest quarter than expected. The furniture maker said the current quarter is also off to a good start, with a solid Memorial Day, even as high interest rates keep down housing activity throughout the economy.
Silk Road Medical jumped 23.8% after Boston Scientific agreed to buy the medical device company in a cash deal valuing it at roughly $1.26 billion, including its cash. Boston Scientific added 0.3%.
In stock markets abroad, indexes continued to recover in Europe following last week’s rout. Surprise victories by far-right parties in elections had raised worries about the potential for mounting debt loads at the French government in particular.
France’s CAC 40 rose 0.8% for a second straight gain.
In Asia, Japan’s Nikkei 225 rose 1%. Heavyweight Toyota Motor climbed after its shareholders rejected a proposal to force Akio Toyoda, grandson of the automaker’s founder, to leave his post as chairman of the board.
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AP Business Writer Elaine Kurtenbach contributed.
Stan Choe, The Associated Press
