U.S. stocks are drifting around their record heights on Monday. The S&P 500 was 0.1% lower in early trading, coming off its latest all-time high set this year and its 16th winning week in the last 18. The Dow Jones Industrial Average was down 145 points, or 0.4%, and the Nasdaq composite was 0.1% lower.
Quick Read
- U.S. stocks are fluctuating around record highs, with the S&P 500 slightly down, the Dow Jones dropping 0.4%, and the Nasdaq marginally lower.
- Excitement around inflation cooling, potential interest rate cuts, and advancements in AI technology have driven the market’s recent success.
- Super Micro Computer’s stock soared by 18.7% following its upcoming inclusion in the S&P 500 index, replacing Whirlpool.
- Nvidia, a key player in AI, continues to see significant growth, with its stock up 3.7%, adding to its impressive gains from last year.
- Concerns are rising about a potential bubble in AI and other areas due to rapid price increases and high expectations.
- Upcoming events, such as Fed Chair Jerome Powell’s testimony and a report on the U.S. job market, could impact the market.
- Retailers like Costco, Gap, and Nordstrom are set to release earnings reports, with Macy’s stock jumping 17.3% after a raised buyout offer.
- Spirit Airlines and JetBlue Airways called off their proposed merger following a court ruling, affecting their stock prices.
- The 10-year Treasury yield increased to 4.22%, and international markets, especially China’s National People’s Congress, are under observation for potential policy updates.
The Associated Press has the story:
Wall Street drifts around its records ahead of a busy week
Newslooks- NEW YORK (AP) —
U.S. stocks are drifting around their record heights on Monday. The S&P 500 was 0.1% lower in early trading, coming off its latest all-time high set this year and its 16th winning week in the last 18. The Dow Jones Industrial Average was down 145 points, or 0.4%, and the Nasdaq composite was 0.1% lower.
U.S. stocks have been roaring higher since late October on excitement that inflation appears to be cooling, cuts to interest rates may be coming and the U.S. economy has so far shrugged off predictions for a recession. At the same time, a frenzy around artificial-intelligence technology has catapulted some stocks to stratospheric heights.
Super Micro Computer, which sells server and storage systems used in AI and other computing, jumped another 18.7% Monday. It’s already more than tripled in 2024 after more than tripling last year.
It’s the first trading for the stock since an announcement that it will join the S&P 500 index of the biggest U.S. stocks on March 18. Such a move could drive even more investment in the company.
It will replace Whirlpool, which slipped 0.1%. The appliance company is on track for a third straight losing year, and it fell back to the S&P 400 index of mid-sized stocks.
The poster child of AI mania is Nvidia, whose chips are powering much of the move into AI. It rose another 3.7% Monday to bring its gain for the young year so far to 72.2% after more than tripling in 2023.
Such spurts are bolstered by a surge in profits and expectations for tremendous growth to continue. But they are also raising worries about another potential bubble as prices whiz at breathtaking speeds.
The market is “euphoric on AI,” according to Savita Subramanian, equity strategist at Bank of America. That can be a concerning signal because too much excitement about stocks can push prices up too high, leading to disappointment later. “Bull markets end with euphoria,” she said in a BofA Global Research report.
But the euphoria so far appears to be concentrated in just AI and some other select areas, and Subramanian raised her target for where the S&P 500 could end this year to 5,400 from 5,000.
Several events scheduled for this week could upset the market.
On Wednesday, the chair of the Federal Reserve will offer testimony before a House of Representatives committee about monetary policy. The hope on Wall Street has been that inflation is cooling enough to get the Federal Reserve to pull its main interest rate down from its highest level since 2001. That would relieve some of the pressure on both the economy and financial markets.
Fed Chair Jerome Powell has already said that the central bank’s next move looks more likely to be a cut than another hike, but he’s also said that the Fed needs to see additional proof that inflation is decisively moving down toward its 2% target. That was before a couple reports recently showed inflation at both the consumer and wholesale levels were higher than expected.
A report on Friday will also show how the U.S. job market is doing, with economists forecasting a slowdown from January’s strong growth. A resilient job market would help to keep the U.S. economy out of recession, which in turn should help drive profits for companies and support stock prices. But too much strength could also mean upward pressure remains on inflation, forcing traders to push out their forecasts for the first cut to interest rates even further out the calendar.
Traders have already mostly given up on their earlier hopes for a cut in March, and they’re now eyeing June as the anticipated beginning.
In the meantime, several retailers will also be offering their latest earnings reports. They include Costco Wholesale, Gap and Nordstrom.
Another retailer, Macy’s, jumped 17.3% after t wo investment firms raised their offer to buy all the shares they don’t own already. The new offer of $24 per share now carries a total value of $6.6 billion, up from $5.8 billion.
Elsewhere on Wall Street, Spirit Airlines lost 10.5%. It and JetBlue Airways are ending their proposed $3.8 billion combination after a court ruling blocked their merger. JetBlue rose 1.4%.
In the bond market, the yield on the 10-year Treasury rose to 4.22% from 4.18% late Friday.
In stock markets abroad, Japan’s Nikkei 225 rose 0.5% and topped the 40,000 level for the first time.
Elsewhere in Asia, the spotlight this week is mainly on China’s National People’s Congress, the country’s most important political event. It opens Tuesday, and investors are watching for updates on specific policies to help support the slowing economy, resolve troubles in the property market and stabilize financial markets.
