Another fall for the Wall Street heavyweight NVIDIA kept US indices mixed on Monday, even as most stocks rose.
The Standard & Poor's 500 index fell 0.3% to move further away from its record set last week. Declines by Nvidia and other winners of Wall Street's AI boom sent the Nasdaq Composite down 1.1%, while the Dow Jones Industrial Average rose 0.7%.
Shares of oil and gas companies were among the strongest in the market, with 7 in 10 S&P 500 stocks rising. Exxon Mobil rose 3% and oilfield services provider SLB gained 4% as oil prices held near their highest levels since April.
Financial companies were also strong. JPMorgan Chase added 1.3% and Wells Fargo rose 1.6% ahead of results due later this week for the Federal Reserve's tests of how big banks would fare in a recession.
But declines in a handful of high-profile stocks offset all those gains, and attention focused more on Nvidia's 6.7% drop. It was the third consecutive drop for the chip company, which had soared 1,000% since fall 2022.
Almost insatiable demand so that Nvidia chips AI power applications has been a great reason for the US stock market to hit records recently, even as the economy's growth slows down under weight of high interest rates. But the rise of AI has been so frenetic that it has raised concerns about a possible stock market bubble and overly high expectations among investors.
Nvidia shares have been retreating since briefly overtaking Microsoft as Wall Street's most valuable stock last week, and are down nearly 13% in just three days. Because Nvidia has become so large in size, its stock movements carry extra weight in the S&P 500 and other indices. It was by far Monday's heaviest weight on the S&P 500.
Other AI beneficiaries also gave up some of their fantastic gains. Super Micro Computer fell 8.6% to cut its profit for the year below 200% to 190.9%.
This rotation among stocks could actually be a healthy sign for the market, as long as it can stay close to its records. Market watchers have been concerned to see that only Nvidia and a handful of other companies are responsible for much of the S&P 500's returns recently. They would prefer a market in which many stocks share in the profits.
RXO jumped 23% after agreed to buy Coyote Logistics UPS freight brokerage business worth nearly $1.03 billion. RXO said the deal would make it the third-largest intermediated 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% profit after saying it agreed to pay $434 million to resolve charges brought by shareholders related to its accounting and sales practices. The sports footwear and apparel company denied any wrongdoing in the deal, but also agreed to separate the roles of president and CEO for at least three years.
In total, 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 fell 192.54 points to 17,496.82.
In the bond market, Treasury yields fell a bit. The 10-year Treasury yield fell to 4.23% from 4.26% late Friday.
It has been mostly falling since hitting 4.70% in late April, which has eased pressure on the stock market. Yields have sunk on hopes that inflation is slowing enough to convince the Federal Reserve to cut its main interest rate later this year.
The Federal Reserve has been keeping the federal funds rate at the highest level in more than 20 years, hoping to weaken the economy enough to get inflation under control.
Federal Reserve officials may be underestimating how much the US economy is slowing, according to UBS economists led by Abigail Watt. They consider that growth will slow below an annualized rate of 2% in the first half of 2024, compared to growth of 3.1% in the fourth quarter of 2023 compared to the previous year.
UBS economists say American households in the bottom 40% of the country in income are burning through their savings after exhausting the cushions they had built during the pandemic. That could go on slow retail salesthat have been up and down as companies highlight how low-income clients often struggle to keep up to date.
Wall Street expects a slowdown in the economy, a slowdown that will remove upward pressure on inflation and push the Federal Reserve to cut rates. Goldman Sachs economist David Mericle said a rate cut could come as early as September if inflation reports like the one due Friday turn out as expected.
The Federal Reserve just needs to make sure it cuts interest rates at the right time. If you wait too long, a slowing economy could lead to a recession. If it's too soon, inflation could accelerate again.
In foreign stock markets, indices rose in much of Europe after falling mainly in Asia.
choe writes for the associated press
