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NEW YORK (AP) — U.S. stocks hovered near all-time highs Monday.
The S&P 500 was little changed in afternoon trading, coming off the all-time high it set this year and marking its 16th winning week out of the past 18 weeks. The Dow Jones Industrial Average was down 50 points, or 0.1%, as of 12:24 p.m. ET, the Nasdaq Composite was down 0.1%.
After a rally in U.S. stocks on excitement that inflation appears to be calming, interest rates may be cut and the U.S. economy has so far defied recession predictions, momentum slows. are doing. At the same time, the frenzy surrounding artificial intelligence technology has sent some stocks soaring to stratospheric heights.
Supermicrocomputers, which sell servers and storage systems used for AI and other computing, rose another 26.5% on Monday. It more than tripled last year, and is already set to more than triple by 2024.
This is the first time the stock has been traded since it was announced that it would join the S&P 500 index within two weeks. Such a move could lead to further investment in the company.
It replaces Whirlpool, which rose 0.7%. The company has been in the red for three consecutive years and is expected to fall behind the mid-cap S&P 400 index. At the same time, Decker’s Outdoor will also be included in the S&P 500, replacing Zion Bancorp.
The poster child for AI mania is Nvidia, whose chips are driving much of the transition to AI. It rose another 4.5% on Monday, taking its year-to-date rise to 73% after more than tripling in 2023. It was the most powerful single force pushing up the S&P 500.
This momentum is fueled by soaring profits and expectations for continued impressive growth. But prices are moving at breathtaking speed, raising concerns about the possibility of another bubble.
Savita Subramanian, an equity strategist at Bank of America, said the market is “intoxicated by AI.” This can be a worrying signal because excitement about the stock can get too high, leading to disappointment later on.
“The bull market ends on a euphoria,” Subramanian said in a report by BofA Global Research. But the excitement so far appears to be focused only on AI and select other areas, as he raised his S&P 500 target for this year’s closing price from 5,000 to 5,400.
Several events scheduled for this week could disrupt the market.
The Fed chair is scheduled to testify before a House committee on monetary policy on Wednesday. Wall Street’s hope is that inflation has cooled enough for the Fed to lower its key interest rate from its highest level since 2001. This would relieve pressure on both the economy and financial markets.
Fed Chairman Jerome Powell has already said his next move will likely be a rate cut, but the Fed needs additional confirmation that inflation is falling decisively toward its 2% target. He also said. That was before several recent reports showed that inflation at both the consumer and wholesale levels was higher than expected.
Friday’s report will outline the state of the U.S. job market, with economists expecting growth to slow after January’s strong growth. The region’s resilience should help protect the U.S. economy from recession, which should boost corporate profits and support stock prices.
However, if it is too strong, inflationary pressures may continue. That would force traders to postpone expectations for an initial rate cut further. Traders have already largely given up on hopes for an early rate cut in March. They are currently looking at June as the expected start time.
Meanwhile, several retailers are also expected to release their latest earnings reports next week. They include Costco Wholesale, Gap, and Nordstrom.
Another retailer, Macy’s, soared 15.5% after two investment firms raised offers to buy shares they don’t already own.
Elsewhere on Wall Street, Spirit Airlines fell 13.9%. The airline and JetBlue Airways are canceling their $3.8 billion merger plan after a court ruling blocked the merger. JetBlue rose 1.3%.
Apple fell 2.8% after the European Union fined the company nearly $2 billion for unfairly favoring its music streaming service over Spotify and other competitors. This was the heaviest weight in the S&P 500.
In the bond market, the yield on the 10-year U.S. Treasury rose to 4.22% from 4.18% late Friday.
In overseas stock markets, Japan’s Nikkei Stock Average rose 0.5%, exceeding the 40,000 yen mark for the first time.
Elsewhere in Asia, this week’s attention will be on China’s most important political event, the National People’s Congress. It opens on Tuesday and could provide an update on policies to support the slowing economy, solve problems in the real estate market and stabilize financial markets.
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AP writers Matt Ott and Zimo Zhong contributed.
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