Wall Street barrels to records as Nvidia tops $3 trillion in value

The New York Stock Exchange, right, is shown in this view looking east on Wall St. on Wednesday, June 5, 2024. Global shares are mixed as investors weigh data highlighting a slowing U.S. economy that offers both upsides and downsides for Wall Street. (AP Photo/Peter Morgan, File)

NEW YORK — Wall Street barreled to records Wednesday as its frenzy around artificial intelligence technology keeps sending stocks higher.

The rally sent the total market value of Nvidia, which has become the poster child of the AI boom, above $3 trillion for the first time.

The S&P 500 climbed 1.2 percent to top its all-time high set two weeks ago. The Nasdaq composite jumped even more, 2 percent, and likewise set a record. The Dow Jones Industrial Average, which has less of an emphasis on tech, lagged the market with a gain of 96 points, or 0.2 percent.

Some fatter-than-expected profit reports from tech companies helped drive the market. Hewlett Packard Enterprise jumped 10.7 percent after saying strong sales related to artificial intelligence systems helped it deliver better results than expected. It also raised its financial forecasts for the year.

Companies have so far been meeting Wall Street’s sky-high hopes for how much money AI technology will generate. That’s helped to catapult stocks almost regardless of what the broader economy and interest rates are doing.

Nvidia and other tech stocks

Nvidia is leading the way because its chips are powering much of the rush into AI, and it rose another 5.2 percent to bring its gain for the year to more than 147 percent. As has become almost routine, Nvidia was again the day’s strongest force lifting the S&P 500.

The chip company also joined Microsoft and Apple as the only U.S. stocks to ever top $3 trillion in total value. Apple regained that milestone valuation after rising 0.8 percent Wednesday.

Other big tech stocks also drove the market higher, including a 1.9 percent rise for Microsoft, a 3.8 percent gain for Meta Platforms, and a 6.2 percent rally for Broadcom. Cybersecurity company CrowdStrike climbed 12 percent after delivering better profit and revenue for the latest quarter than expected.

All told, the S&P 500 rose 62.69 points to 5,354.03. The Nasdaq jumped 330.86 to 17,187.90, and the Dow added 96.04 to 38,807.33.

The gains for tech stocks helped offset a 4.9 percent drop for Dollar Tree, which matched analysts’ expectations for profit but fell just shy of revenue. The retailer also said it’s considering selling or spinning off its Family Dollar business.

The broad retail industry has been highlighting challenges for lower-income U.S. households, which are trying to keep up with still-high inflation.

Treasury yields fell in the bond market following some mixed data on the economy. One report said real estate, health care, and other businesses in the U.S. services sector returned to growth last month and beat economists’ forecasts. Perhaps more importantly for Wall Street, the report from the Institute for Supply Management also said prices rose at a slower pace in May than a month before.

READ: Private sector hiring in US cools more than expected: ADP

Another report in the morning suggested hiring slowed last month by more than expected at U.S. employers outside the government.

High interest rates

Stocks had been shaky recently after reports suggested the U.S. economy’s growth is fading under the weight of high interest rates. Wall Street has been hoping for such a slowdown because it can drive down inflation and convince the Federal Reserve to deliver much-desired cuts to interest rates.

But it also raises the possibility of overshooting and sending the economy into a recession, which would ultimately hurt stock prices.

Treasury yields sank after the weaker-than-expected economic reports raised expectations for coming cuts to rates by the Federal Reserve. They eased more on Wednesday. The yield on the 10-year Treasury fell to 4.28 percent from 4.33 percent late Tuesday and from 4.60 percent a week ago.

The next big move for Treasury yields and Wall Street overall could come Friday, when the U.S. government releases its monthly jobs report. That report is much more comprehensive than Wednesday’s from ADP, and economists expect Friday’s data to show a slight pickup in overall hiring. The hope continues to be that the job market slows its growth but not by so much that it devolves into widespread layoffs.

Fed rate hike?

The worst-case scenario for markets would likely be if data on the jobs market and the rest of the economy come in stronger than expected, according to JJ Kinahan, CEO of IG North America.

That could push the Federal Reserve to consider hiking its main interest even further, which would put more strain on the economy and investment prices. The federal funds rate has been sitting at its highest level in more than two decades.

But Kinahan says he sees this scenario as less likely than others.

READ: Most markets rise on US jobs data but fears temper optimism

In stock markets abroad, indexes rose across much of Europe ahead of a decision on interest rates Thursday by the European Central Bank. Investors expect it to cut rates amid worries about the continent’s economy.

Stocks fell across much of Asia, with indexes dropping 0.9 percent in Tokyo and 0.8 percent in Shanghai, but they rose 1 percent in Seoul.