Stock market today: AI and rate hopes lift Wall Street to record, even as most stocks fall

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NEW YORK (AP) — Most U.S. stocks slipped on Thursday, but hopes of interest rate cuts and Wall Street's continued frenzy around artificial intelligence technology pushed indexes to another record.

The S&P 500 added 0.2% to its all-time high a day earlier, although most stocks within it weakened. The Nasdaq Composite climbed 0.3 percent from its own record, helped by gains in technology stocks, while the Dow Jones Industrial Average fell 65 points, or 0.2 percent.

Treasury yields eased again in the bond market on confidence that inflation is slowing enough to get the Federal Reserve to cut interest rates later this year.

gave Latest update on inflation It turned out that prices paid at the wholesale level were not as bad as economists had expected. Prices actually fell from April to May, when economists were predicting a rise.

Wall Street is hovering in record territory. Apk Seth Sotel has more.

Then there was a surprise. Update from Wednesday that showed inflation. The consumer level was lower than expected. Federal Reserve Chair Jerome Powell called the report encouraging and said more data like this is needed before policymakers cut their key interest rate from the most punishing level in two decades. .

“It's a question of when they bite, if not,” said Niladri “Neil” Mukherjee, chief investment officer at TIAA Wealth Management.

High interest rates are a drag on parts of the economy, especially manufacturing. A separate report showed on Thursday. More American workers filed for unemployment. The gains were more than economists expected last week, although the numbers are still lower than they have been historically.

The hope on Wall Street is that the job market and economic growth are slowing enough to ease inflationary pressures, but not so much as to lead to a deep recession.

Companies whose profits are most closely tied to the strength of the economy lagged the market on Thursday after the reports, such as oil and gas producers and industrial companies.

Dave & Buster's Entertainment sank 10.9 percent after reporting a worse-than-expected decline in profit and revenue in the latest quarter, citing a “difficult economic environment” among other reasons. Other companies are recently detailing the distribution between their customers, where Low-income families are at a disadvantage. Still to keep up with high inflation.

Due to the ongoing frenzy around artificial intelligence technology, some companies have been able to skyrocket regardless of the pressure on the economy.

Broadcom jumped 12.3 percent after the semiconductor company reported stronger-than-expected profit, again helped by AI demand. It has also raised its forecast for earnings this year.

Broadcom's stock price has jumped so high, to around $1,700, that it will soon give away nine shares for every one that investors already own to lower the price and make it more affordable. can go. It follows a A similar move from Nvidiawhich has become the poster child of the AI ​​rush and has reached a total market value of $3 trillion.

Tesla rose 2.9 percent after CEO Elon Musk said early voting results showed a tilt toward shareholders. Approval of his salary package. Without it, Musk has threatened to move AI research to another company of his own.

All told, the S&P 500 rose 12.71 points to 5,433.74. The Dow slipped 65.11 to 38,647.10, and the Nasdaq gained 59.12 to 17,667.56.

In the bond market, the 10-year Treasury yield fell to 4.24% from 4.32% late Wednesday and 4.60% late last month. The two-year yield, which moves higher than Fed expectations, fell to 4.69% from 4.76%.

Most Fed officials are on track for one or two interest rate cuts this year, and traders hope they could start as soon as September. Such cuts will reduce the pressure on the economy and boost the prices of all kinds of investments.

TIAA's Mukherjee said he expects growth in the U.S. economy to slow as spending by lower-income households weakens under pressure from shrinking savings accounts. But he expects the economy to avoid recession as spending continues by wealthy households that benefit from fat investment portfolios and home values, as well as governments and corporations.

“To me, the soft landing for the economy” where inflation eases without a deep recession “has already been achieved,” he said.

But that has muted expectations for the stock for the rest of the year after already gaining a lot. The S&P 500 is up about 14 percent. In addition, he points to the potential for upheaval in financial markets around upcoming elections, including the US presidential race.

“I will be ready for more election surprises,” Mukherjee said. “I don't know which one, but the world seems to be full of surprises these days.”

European markets have rallied after recent elections in places like France and Germany saw a surprising surge in support for the far-right. Markets have also been volatile recently as investors learn of election results in other countries such as Mexico and India.

European stocks fell sharply on Thursday. A group of seven The leading industrial nations gathered in Italy. France's CAC 40 fell 2%, and Germany's DAX fell 2%.

In Asia, Japan's Nikkei 225 fell 0.4 percent ahead of the Bank of Japan's interest rate decision on Friday. Indexes rose in Seoul and Hong Kong.

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AP Business writers Yuri Kageyama and Matt Ott contributed.

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