Stock market today: Wall Street drifts around its records ahead of a busy week

NEW YORK (AP) — U.S. stocks were hovering near all-time highs on Monday.

The S&P 500 was down 0.1% in morning trading, coming off its last all-time high set this year and its 16th winning week in the last 18. The Dow Jones Industrial Average was down 60 points, or 0.2%, at 10: 30 a.m. ET and the Nasdaq Composite was down 0.3%.

Momentum is slowing for U.S. stocks after rising sharply on enthusiasm Inflation appears to be coolingshort to Interest rates may be coming and the US economy has so far ignored the 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 servers and storage systems used in artificial intelligence and other computing, rose another 19.5% on Monday. It had already more than tripled in 2024 after tripling last year.

It is the first trading of the stock since the announcement that it will join the S&P 500 index of the largest U.S. stocks in two weeks. A measure of this type could generate even more investments in the company.

It will replace Whirlpool, which rose 0.4%. The appliance company is on track to post a loss for the third straight year and will fall back to the S&P 400 index of mid-stocks. At the same time, Deckers Outdoor will also replace Zion Bancorp in the S&P 500.

The emblematic example of AI mania is Nvidia, whose chips are driving much of the shift toward AI. It rose another 3.6% on Monday to bring its gain for the young year so far to 72.2% after more than tripling in 2023. It was the strongest single force driving the S&P 500 higher.

These booms are fueled by rising profits and expectations that huge growth will continue. But they are also raising concerns about another possible bubble as prices soar at breakneck speeds.

The market is “euphoric about AI,” according to Savita Subramanian, equity strategist at Bank of America. This can be a worrying sign because too much enthusiasm for the stock can push prices up too high, leading to later disappointment.

"Bull markets end with euphoria," Subramanian said in a BofA Global Research report. But so far the euphoria appears to be focused only on AI and other select areas, and she raised her target for where the S&P 500 could end up this year from 5,000 to 5,400.

Several events scheduled for this week could disrupt the market.

On Wednesday, the chairman of the Federal Reserve will testify before a House committee on monetary policy. Wall Street's hope has been that inflation is cooling enough for the Federal Reserve to cut its main interest rate from its highest level since 2001. That would ease the pressure that has built up in both the economy and markets. financial markets.

Federal Reserve Chair Jerome Powell has already said his next move is likely to be a cut, but he has also said the Fed needs additional confirmation that inflation is moving decisively toward its 2% target. That was before a couple of reports recently showed inflation both at the consumer and wholesale The levels were higher than expected.

A report on Friday will show how the U.S. labor market is faring, with economists predicting a slowdown from January's strong growth. Resilience there has helped keep the U.S. economy out of recession, which in turn should boost company profits and support stock prices.

But too much strength could also keep pressure on inflation. That would force traders to further delay forecasts for the first rate cut. Traders have already mostly abandoned earlier hopes for a March cut. They now consider June as the early start.

Meanwhile, several retailers will also offer their latest earnings reports next week. They include Costco Wholesale, Gap and Nordstrom.

Another retailer, Macy's, rose 15.1% after two investment firms made his purchase offer the shares they do not yet own.

Elsewhere on Wall Street, Spirit Airlines lost 13.7%. He and JetBlue Airways are end its proposed $3.8 billion combination after a court ruling blocked their merger. JetBlue rose 3.4%.

Apple fell 3% after the European Union hit it with a fine of almost 2 billion dollars for unfairly favoring its own music streaming service over Spotify and other rivals. It was the heaviest weight in the S&P 500.

In the bond market, the 10-year Treasury yield rose to 4.22% from 4.18% last Friday.

On foreign stock markets, the Japanese Nikkei 225 rose 0.5% and surpassed the level of 40,000 points for the first time.

Elsewhere in Asia, attention this week is on China's National People's Congress, the country's most important political event. It opens Tuesday and could provide updates on policies to support the slowing economy, resolve problems in the housing market and stabilize financial markets.

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