Stock Market Today: AI Madness Pulls Wall Street Higher Despite DC Debt Trouble | Company

NEW YORK (AP) Wall Streets building frenzy over artificial intelligence helped pull the stock market higher on Thursday, even as concerns about political rancor mount in Washington.

The S&P 500 then rose 0.9% chipmaker Nvidia issued a monster prediction for upcoming sales as it benefits from the tech world’s rush to AI. It helped the Nasdaq composite rise 1.7% while the Dow Jones Industrial Average fell 35 points, or 0.1%.

Being one of Wall Street’s most valuable stocks, Nvidia’s 24.4% gain was the strongest driver for the S&P 500. The forecast of about $11 billion in revenue for the current quarter beat analyst 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.

Shares of other chip makers also moved 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 rose, adding to the recent gains fueled by the excitement over 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 raise indexes even as the majority of stocks fell on US government concerns getting closer to a possible standard on his fault. Washington could run out of money to pay its bills by June 1 unless Congress allows it to borrow more.

The widespread expectation on Wall Street was that Washington would make a deal before it’s too late, as has happened so many times before, because a failure would likely be terrible for the economy. But bitter partisanship on Capitol Hill harms faith and trust in government.

Fitch said late Wednesday that it could downgrade the US government’s AAA 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 growing.

The breach of the debt ceiling, the failure of US authorities to meaningfully address medium-term fiscal challenges that will lead to rising budget deficits and a growing debt burden point to downside risks to US creditworthiness, Fitch said.

In 2011, Standard & Poors downgraded its AAA rating for the United States after similar political squabbling over the debt limit.

Another concern concerns exactly when the X date deadline will arrive for the US Treasury to run out of cash.

While Isaac Boltansky, BTIG’s director of policy research, said he sees an eleventh-hour deal happening, Washington is still arguing over exactly when midnight hits, which remains our main concern as deadlines are the only viable coercive mechanism in the city.

On the losing side of Wall Street was Dollar Tree, which fell 12%. The retailer reported weaker earnings than analysts had expected for the last quarter. customers shift their spending to less profitable products, and it also suffers from worse-than-expected theft, just like other retailers.

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

Yields rose in the bond market after reports suggested the economy is stronger than feared.

said one fewer workers applied for unemployment benefits last week than expected. That is a signal that the labor market remains remarkably solid, even as manufacturing and other parts of the economy slow under the weight of much higher interest rates.

Another report estimated the US economy grew at an annual rate of 1.3% stronger than the 1.1% previously thought in the first three months of the year. That report also suggested inflation was slightly hotter in early 2023 than previously thought.

The stronger-than-expected data helped allay investor fears of a coming recession. But it could also convince the Federal Reserve to raise rates again next month. Traders are divided on whether the Fed will take a break in June after more than a year of furiously raising rates.

Higher rates helped inflation slow from last summer’s high, but they do so by slowing the entire economy and dragging prices for stocks, bonds and other investments.

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

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

Stock markets abroad were mostly weaker, but the declines were milder than the previous days.

The German DAX lost 0.3% after the data showed its economy shrank in the first three months of the year, the second consecutive quarter that has occurred.

Hong Kong’s Hang Seng fell 1.9% on concerns over China’s economic recovery after the government eased pandemic restrictions. Shares in Shanghai fell 0.1%.

AP Business Writers Elaine Kurtenbach and Matt Ott contributed.

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