UNITED STATES NEWS

Stock market today: AI frenzy pulls Wall Street higher despite DC debt woes

May 25, 2023, 12:32 AM | Updated: 1:26 pm

NEW YORK (AP) — Wall Street’s building frenzy around artificial intelligence helped yank the stock market higher Thursday, even as worries worsen about political rancor in Washington.

The S&P 500 rallied 0.9% after chipmaker Nvidia gave a monster forecast for upcoming sales as it benefits from the tech world’s rush into AI. It helped the Nasdaq composite leap 1.7%, while the Dow Jones Industrial Average slipped 35 points, or 0.1%.

Because it’s one of Wall Street’s most valuable stocks, Nvidia’s 24.4% surge was the strongest force pushing upward on the S&P 500. Its forecast of roughly $11 billion in revenue for the current quarter blew past analysts’ expectations for less than $7.2 billion. Nvidia’s stock has already more than doubled this year, and its total value is approaching $1 trillion.

Stocks of other chip makers also charged higher after Nvidia described a race by its customers to put AI “into every product, service and business process.” Advanced Micro Devices gained 11.2%.

Some Big Tech stocks rallied, adding to recent gains fueled by excitement about AI. The field has become so hot that critics warn of a possible bubble, while supporters say it could be the latest revolution to reshape the global economy. Microsoft gained 3.8%, and Google’s parent company, Alphabet, rose 2.1%.

They helped lift indexes even as the majority of stocks fell on worries about the U.S. government edging closer to a possible default on its debt. Washington could run out of cash to pay its bills as soon as June 1, unless Congress allows it to borrow more.

The widespread expectation on Wall Street has been for Washington to reach a deal before it’s too late, as it has many times before, because a failure would likely be awful for the economy. But bitter partisanship on Capitol Hill is hurting faith and trust in the government.

Fitch said late Wednesday that it could downgrade the U.S. government’s “AAA” credit rating. It said it still expects a resolution before the U.S. Treasury runs out of cash, but it sees the risk of a mistake having risen.

“The brinkmanship over the debt ceiling, failure of the U.S. authorities to meaningfully tackle medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden signal downside risks to U.S. creditworthiness,” Fitch said.

In 2011, Standard & Poor’s cut its “AAA” credit rating for the United States following a similar political squabble about the debt limit.

Another concern rests on exactly when the “X-date” deadline will hit for the U.S. Treasury to run out of cash.

While Isaac Boltansky, BTIG director of policy research, said he sees an 11th hour deal happening, “Washington is still arguing over exactly when midnight hits, which remains our primary concern as deadlines are the only viable forcing mechanism in town.”

On the losing end of Wall Street was Dollar Tree, which fell 12%. The retailer reported weaker profit than analysts expected for the latest quarter. ustomers are shifting spending toward less profitable products, and it’s also contending with worse-than-expected theft like other retailers.

All told, the S&P 500 rose 36.04 points to 4,151.28. The Dow slipped 35.27 to 32,764.65, and the Nasdaq gained 213.93 to 12,698.09.

In the bond market, yields rallied after reports suggested the economy is in stronger shape than feared.

One said fewer workers applied for unemployment benefits last week than expected. That’s a signal the job market remains remarkably solid, even as manufacturing and other areas of the economy slow under the weight of much higher interest rates.

Another report estimated the U.S. economy grew at a 1.3% annual pace in the first three months of the year, stronger than the 1.1% earlier thought. That report also suggested inflation was a touch hotter during the start of 2023 than earlier thought.

The stronger-than-expected data helped dampen investors’ fears about a coming recession. But it could also convince the Federal Reserve to raise interest rates again next month. Traders are split on whether the Fed will take a pause in June after hiking rates at a furious pace for more than a year.

Higher rates have helped inflation to slow from its peak last summer, but they do that by slowing the entire economy and dragging on prices for stocks, bonds and other investments.

The yield on the two-year Treasury, which tends to track expectations for Fed action, jumped to 4.53% from 4.38% last Wednesday.

The 10-year yield rose to 3.81% from 3.74%. It helps set rates for mortgages and other important loans.

Stock markets abroad were mostly weaker, but the declines were milder than the prior day’s.

Germany’s DAX lost 0.3% after data showed its economy shrank in the first three months of the year, the second straight quarter that’s occurred.

Hong Kong’s Hang Seng fell 1.9% amid worries China’s economic recovery after the government relaxed pandemic restrictions is losing steam. Stocks in Shanghai slipped 0.1%.

——

AP Business Writers Elaine Kurtenbach and Matt Ott contributed.

United States News

FILE - A voting sign is seen near a voting center at Croft Baptist Church, Feb. 24, 2024, in Sparta...

Associated Press

A chunk of Republican primary and caucus voters say they wouldn’t vote for Trump as the GOP nominee

About 1 in 10 early contest voters who said they supported Trump in the 2020 general election said they wouldn’t be doing so this year.

28 minutes ago

Associated Press

2 police horses on the lam cause traffic jam on I-90 in Cleveland area

CLEVELAND (AP) — Drivers on an Ohio interstate came upon an unusual traffic hazard over the weekend — a pair of police horses trotting against traffic on the highway. The two animals on the lam caused an unusual traffic jam Saturday afternoon as they wove through slowing traffic and then stopped it on Interstate 90 […]

4 hours ago

On Friday, March 1, 2024, the U.S. Food and Drug Administration said yogurt sold in the U.S. can ma...

Associated Press

Eating yogurt may reduce risk of type 2 diabetes, FDA says

Eating at least two cups of yogurt a week might reduce the risk of type 2 diabetes, the U.S. Food and Drug Administration said.

4 hours ago

Associated Press

Georgia teen critically injured after police trade gunfire with a group near Six Flags

AUSTELL, Ga. (AP) — A 15-year-old boy was critically injured in a shooting near Six Flags Over Georgia, a popular amusement park in suburban Atlanta, after police exchanged gunfire with a group of people, authorities said Sunday. Cobb County Police Department officers were assisting with crowd control near the amusement park’s entrance on Saturday “after […]

5 hours ago

Associated Press

Cancer patient dragged by New York City bus, partially paralyzed, awarded $72.5 million in lawsuit

NEW YORK (AP) — A Florida woman who says she was struck and dragged by a New York City bus and left partially paralyzed has been awarded $72.5 million in her lawsuit against the city’s transit agency. A city jury found in favor of Aurora Beauchamp, now 68, who was hit by a Metropolitan Transportation […]

6 hours ago

Associated Press

Key Northern California highway closed as snow continues to fall in the blizzard-hit Sierra Nevada

TRUCKEE, Calif. (AP) — A major highway was closed and ski resorts were shut down Sunday as the effects of a powerful blizzard continued to cause problems across the Sierra Nevada, and forecasters warned that more heavy snow was on the way for Northern California. Sections of Interstate 80 to the west and north of […]

8 hours ago

Sponsored Articles

...

Midwestern University

Midwestern University Clinics: transforming health care in the valley

Midwestern University, long a fixture of comprehensive health care education in the West Valley, is also a recognized leader in community health care.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

...

Day & Night Air Conditioning, Heating and Plumbing

Valley residents should be mindful of plumbing ahead of holidays

With Halloween in the rear-view and more holidays coming up, Day & Night recommends that Valley residents prepare accordingly.

Stock market today: AI frenzy pulls Wall Street higher despite DC debt woes