Stock Market Today: Wall Street Moves Inches Up Towards Bull Market Edge

NEW YORK (AP) US stocks rallied Tuesday amid a vacuum of market-moving data, pushing Wall Street closer to the brink of what has been called a bull market.

The S&P 500 rose 10.06 points, or 0.2%, to 4,283.85. It’s just 0.2% off a day 20% higher than mid-October as a long-predicted recession has yet to hit and excitement around artificial intelligence helped a select group of stocks rise.

The Dow Jones Industrial Average rose 10.42, or less than 0.1%, to 33,573.28, while the Nasdaq index rose 46.99, or 0.4%, to 13,276.42.

This week, there are few top-level economic reports and corporate earnings updates to help Wall Street answer its most important question. It wants to know what will happen first: a recession or inflation that falls enough to prompt the Federal Reserve to lower interest rates, which have risen so high that they have hurt several parts of the economy.

That’s why next week is looming big. The US government will publish its latest monthly updates on inflation and the Federal Reserve will meet on interest rate policy. The bet on Wall Street is that the Fed may hold off on raising interest rates, which would be the first time in more than a year to do so, but could resume rate hikes in July.

What you’re seeing in the markets is a reaction to a Fed that is likely to pause if the economy hasn’t already entered recession, said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management. I think the unfortunate reality is a general recession.

Some parts of the economy have already collapsed under the weight of much higher interest rates, including manufacturing and the US banking system. Schutte expects the labor market to eventually follow suit, even though a Friday report showed that employers unexpectedly accelerated hiring last month.

I think the Fed believes that unless they create a slack labor market, they are still afraid they have to do more with rate hikes to control inflation because the labor market is too tight, Schutte said. I think that’s what we call a recession.

Some of the strongest action of the day was in the cryptocurrency world after the Securities and Exchange Commission charged Coinbase operating its trading platform as an unregistered national stock exchange, broker and clearing house.

Shares of its parent company, Coinbase Global, fell 12.1% after the SEC also accused it of being liable for some of Coinbase’s violations. Other charges focused on Coinbase’s staking-as-a-service program, where users receive payments for their crypto, almost as if they were earning interest from a traditional bank savings account.

Coinbase criticized the SEC’s approach to crypto, saying the solution is legislation that allows for fair road rules to be developed transparently and applied equally, not litigation.

A day earlier, the SEC filed 13 charges against another huge crypto trading platform, Binance, and its founder. Binance said it was in talks to reach a negotiated settlement to resolve the SEC investigations and said the SEC is committed to regulating with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach being taken. demanded by this dynamic and complex technology.

Elsewhere in the markets, oil prices gave up some gains, driven earlier this week by Saudi Arabia’s announcement that it would cut production to drive up the price of crude oil. A barrel of US crude fell 41 cents to $71.74. A barrel of Brent crude, the international standard, fell 42 cents to $76.29.

Both were near $120 a year ago but have fallen amid concerns about tight fuel needs in the global economy.

On the winning side of Wall Street was Gitlab, which rose 31.2% after the software development platform issued a fiscal year revenue forecast that beat analyst expectations. It also said it expects a milder loss than Wall Street had predicted as it benefits from an artificial intelligence rush.

A frenzy around AI has led to a handful of stocks making huge gains this year, including Nvidia’s 164.5% rise. That contributed to much of the S&P 500’s gains in 2023, but it also left critics wondering if a bubble is brewing. They also say the furor around AI may mask the weakness below the surface of the S&P 500.

While the S&P 500 is closing in on a bull market, stocks have fallen almost as much as they have risen this year, while concerns remain about declining corporate profits, still high inflation and much higher interest rates than a year ago.

To mitigate some of that criticism, many banks rallied on Tuesday.

They are under pressure because the Fed’s fastest wave of rate hikes in decades has prompted some bank customers to withdraw their deposits and put them into money market funds that pay more interest. At the same time, interest rate hikes have lowered the value of bonds and other investments banks made when interest rates were low.

The pressure has led to several high-profile bank failures and prompted Wall Street to penalize stocks of other banks as it hunts for possible victims. Comerica rose 7.1% for the biggest gain in the S&P 500.

Some of the most closely watched banks also rose, including an 8.1% jump for PacWest Bancorp.

In the bond market, the yield on the 10-year Treasury fell from 3.69% late Monday to 3.68%. It helps set rates for mortgages and other important loans.

On the foreign exchanges, the Australian S&P ASX 200 fell 1.2% after the central bank raised its benchmark interest rate by 0.25 percentage point to 4.1% and warned that further increases could follow.

AP Business Writers Matt Ott and Joe McDonald contributed.