Stock market today: Tech leads more gains on Wall Street
By Damian J. Troise, The Associated Press on May 26, 2023.
NEW YORK (AP) – Stocks rose on Wall Street, led by more gains in technology stocks as another chipmaker reported strong demand related to artificial intelligence. The S&P 500 rose 1.3% Friday, and the Nasdaq rose 2.2%. The Dow added 1%. Marvell Technology jumped 33% after saying it expects AI revenue to at least double in fiscal 2024 from the prior year. That follows Thursday’s report from fellow chipmaker Nvidia, which gave a big forecast for upcoming sales related to AI. Investors were encouraged to see a pickup in consumer spending last month. U.S. markets will be closed on Monday for Memorial Day. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. NEW YORK (AP) – Stocks rose in afternoon trading on Wall Street Friday, led by more gains in technology stocks as another chipmaker reported strong demand related to artificial intelligence. The S&P 500 rose 1.3% and is on track to close the week with a small gain. The Dow Jones Industrial Average rose 339 points, or 1%, at 33,105 as of 2:45 p.m. Eastern and the Nasdaq rose 2.2%. Technology stocks were doing much of the heavy lifting for the benchmark S&P 500. Marvell Technology surged 29% after the chipmaker said it expects AI revenue in fiscal 2024 to at least double from the prior year. That follows Thursday’s report from fellow chipmaker Nvidia, which gave a big forecast for upcoming sales related to AI. The revolutionary AI field has become a hot issue. Critics warn that it is a potential bubble, but supporters supporters say it could be the latest revolution to reshape the global economy. The nation’s financial watchdog, the Consumer Finance Protection Bureau, said it’s working to ensure that companies follow the law when they’re using AI. Wall Street remains focused on Washington and ongoing negotiations for a deal to lift the U.S. government’s debt ceiling and avert a potentially calamitous default. Officials said President Joe Biden and House Speaker Kevin McCarthy were narrowing in on a two-year budget deal that could open the door to lifting the nation’s debt ceiling. The Democratic president and Republican speaker hope to strike a budget compromise this weekend. Wall Street and the broader economy already had a full roster of concerns before the threat of the U.S. defaulting on its debt became sharply highlighted on the list. “Should we avoid that, and it appears that is a high probability, we come back to a trajectory of a slowing economy, still-too-high inflation and restrictive monetary policy,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. A key measure of inflation that is closely watched by the Federal Reserve ticked higher than economists expected in April. The persistent pressure from inflation complicates the Fed’s fight against high prices. The central bank has been aggressively raising interest rates since 2022, but recently signaled it will likely forgo a rate hike when it meets in mid-June. The latest government report on inflation is raising concerns about the Fed’s next move. Wall Street is now leaning slightly toward the potential for another quarter-point rate hike in June, according to CME’s Fedwatch tool. The Fed has already raised its benchmark interest rate 10 times in a row. The Fed faces a difficult choice at its next meeting, wrote Brian Rose, senior US economist at UBS, in a report. “Inflation is too high but further rate hikes could push the economy into recession,” he said. Bond yields had been slipping just prior to the latest inflation data, but rose following the report. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, rose to 3.80% from 3.78% just before the report was released. Movement for the two-year Treasury yield, which tends to track expectations for Fed action, was more forceful. It jumped to 4.56% from 4.49% prior to the report. The latest inflation data also highlighted the continued resilience of consumer spending, which has been a key bulwark, along with the strong jobs market, against a recession. The economy grew at a sluggish 1.3% annual rate from January through March and it is projected to accelerate to a 2% pace in the current April-June quarter. The impact from inflation and worries about a recession on the horizon have been hitting corporate profits and forecasts. The latest round of company earnings is nearing a close with the profits for companies in the S&P 500 contracting about 2%. That follows a previous quarterly contraction and Wall Street expects the current quarter to end with more shrinking profits. Beauty products company Ulta Beauty fell 13.1% after trimming its forecast for profit margins. Discount retailer Big Lots fell 14% after reporting a much bigger loss last quarter than analysts expected. Investors rewarded several companies that reported strong financial results. Gap rose 13.4% after reporting a strong first-quarter profit. Markets in Europe and Asia gained ground. Markets are heading into a long weekend and will be closed in the U.S. for the Memorial Day holiday on Monday. Investors have another busy week of economic updates ahead, including more information on consumer confidence and employment. – – – Business Writers Christopher Rugaber, Elaine Kurtenbach and Matt Ott contributed to this report. 26-25
