NEW YORK (AP) — Nvidia's stunning stock run took it to the top of the market Tuesday, making it the most valuable company on Wall Street. Meanwhile, stock indices hit more records following the latest sign that the U.S. economy growth may be slowing no craters.
The S&P 500 added 0.3% to set an all-time high for the 31st time this year. The Nasdaq composite rose less than 0.1% to set its own record, while the Dow Jones Industrial Average added 56 points, or 0.1%.
Beneath that quiet market surface, Nvidia was once again the star. It rose again, this time by 3.5%. It was the strongest force driving the S&P 500 higher, again. And it once again raised its total market value above $3 trillion.
It took the top spot on Wall Street from Microsoft, which has been trading the crown with Apple after it was snatched from titans of the past like Exxon Mobil and cigarette maker Philip Morris.
Microsoft and Apple were at the forefront of Big Tech, which is the dominant force in the American stock market after accumulating strength thanks to the digitalization of the world. Nvidia is riding the wave of a more specific technology boom, this time in artificial intelligence.
Nvidia's chips are helping to develop AI, which advocates hope will change the world as much or more than the Internet, and demand for its chips has proven surprisingly voracious. Nvidia's revenue routinely triples every quarter and its profits are soaring at even more impressive rates. Its shares are up nearly 174% this year, and Nvidia alone was responsible for nearly a third of the S&P 500's total gain over the year through May.
Of course, a potential danger of having a handful of superstars responsible for most of the US stock market's record run is a more fragile market. If more shares participated, it could be a sign of a healthier market.
Overall, stocks got some momentum on Tuesday thanks to lower yields in the bond market. Treasury yields fell after a report showed U.S. retail sales returned to growth last month but remained below economists' expectations.
This could be an encouraging sign for the Federal Reserve, which is trying to pull off a difficult balancing act for the economy. The Federal Reserve wants to slow the economy enough through high interest rates to control inflation. The hope is that it will reduce its main rate, which is at its highest level in two decades, in time so that the slowdown does not descend into a painful recession.
Following the release of retail sales data, bets increased among traders that the Federal Reserve will cut rates at least twice this year, according to CME Group data. Federal Reserve officials themselves are largely planning for one or two cuts in 2024.
The 10-year Treasury yield fell to 4.21% from 4.29% late Monday. The two-year yield, which more closely tracks the Federal Reserve's expectations, fell to 4.70% from 4.77%.
A survey of global fund managers by Bank of America showed they are the most bullish on stocks since fall 2021, with relatively little stashed in cash and large allocations to stocks. Fewer managers are also calling for a “hard landing” in which the economy falls into a serious recession.
The downside to Tuesday's weaker-than-expected data is that it could be a warning sign that the main driver of the U.S. economy, household spending, is faltering. In addition to the May figures, the US government also revised retail sales figures downward from previous months.
Inflation remains high, even if it has slowed from its peak, and low income households in particular, they 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 shares fell even though it reported better earnings for the latest quarter than analysts expected.
Fisker shares fell by more than half to 2 cents after the electric vehicle maker filed for Chapter 11 bankruptcy protection. The company cited "several macroeconomic and market headwinds."
On the winning side of Wall Street was La-Z-Boy, which jumped 19.4% after reporting stronger-than-expected earnings and revenue for the latest quarter. The furniture maker said the current quarter is also off to a good start, with a strong Memorial Day, even as high interest rates keep real estate activity in check.
Silk Road Medical rose 24% after Boston Scientific agreed to buy the medical device company in an all-cash deal valuing it at about $1.26 billion, including its cash. Boston Scientific added 0.2%.
In total, the S&P 500 rose 13.80 points to 5,487.03. The Dow Jones gained 56.76 to 38,834.86 and the Nasdaq composite rose 5.21 to 17,862.23.
In foreign stock markets, indices continued to recover in Europe after last week's decline. The surprise victories of far-right parties in the elections had raised concerns about the possibility of debt loads building up on the French government in particular.
France's CAC 40 rose 0.8% for the second consecutive gain.
In Asia, Japan's Nikkei 225 rose 1%. Heavyweight ToyotaEngine rose 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.
