Wall Street Churns to Mixed Finish Tues05/30 15:47
Wall Street churned to a mixed finish Tuesday as a long list of worries
looms, even if the most pressing crisis seems to be calming as Washington moves
to avoid a default on its debt.
NEW YORK (AP) -- Wall Street churned to a mixed finish Tuesday as a long
list of worries looms, even if the most pressing crisis seems to be calming as
Washington moves to avoid a default on its debt.
The S&P 500 edged up by 0.07, or less than 0.1%, to 4,205.52, hovering close
to its highest level since August. The Dow Jones Industrial Average slipped
50.56 points, or 0.2%, to 33,042.78. The Nasdaq composite, meanwhile, led the
market with a 0.3% gain as excitement keeps building about artificial
intelligence. It rose 41.74 to 13,017.43.
Tuesday marked the U.S. stock market's first trading since President Joe
Biden and House Speaker Kevin McCarthy struck a deal to allow the U.S.
government to borrow more money, which would let it avoid a default on its
debt. They now must convince Congress to approve it before the U.S. government
runs out of cash to pay its bills, which could happen as soon as Monday.
Some on Capitol Hill are unhappy about the deal's details, and Biden and
McCarthy are both working to gather votes. The wide expectation on Wall Street
has been for Washington to reach a deal in the 11th hour because failure would
likely mean tremendous pain for the economy and financial markets.
Even if there is no default, though, all the partisan brinkmanship could
erode more faith and trust in the U.S. government. That could trigger another
downgrade to its credit rating, following Standard & Poor's rating cut in 2011.
Beyond the drama around the nation's debt limit, financial markets have been
battling a long list of concerns. The economy is slowing, inflation is still
high and interest rates may be heading even higher, which would further tighten
the reins on the economy and financial markets.
The worries are also global, with China's economic recovery weaker than
expected following its relaxation of anti-COVID restrictions.
U.S. stocks have rallied despite such worries recently after companies
reported drops in profit for the start of the year that weren't as bad as
feared. And at the center of it has been Wall Street's growing frenzy over AI.
Nvidia, whose chips are helping to power the tech world's newest rush, rose
another 3% after already more than doubling so far this year. Last week, it
gave a monster forecast for upcoming revenue as it described customers of all
kinds racing to apply AI to their businesses.
Nvidia's surge has its total value nearing $1 trillion, a threshold passed
by only the biggest stocks, including Apple. The huge gains are raising worries
about another possible bubble sweeping the stock market. But evangelists say AI
is the next big revolution to reshape the global economy.
Also helping to prop up Wall Street in recent weeks have been reports
showing a resilient job market and other signals that the slowing economy may
avoid a recession.
"I'm sure there's going to be a lot of money to be made in AI for a select
group of companies, but that's not enough to lift the entire economy out of a
potential recession here," said Rich Weiss, senior vice president at American
He acknowledged the job market has remained much better than he expected
under the weight of higher interest rates, but he points to weakness in the
housing market, manufacturing, corporate profits and other areas that often
fall before the labor market ahead of a recession.
"The job market will follow the others, not the other way around," Weiss
He also highlighted how concentrated the stock market's gains have been this
year among a handful of companies, many benefiting from AI. The majority of
stocks in the S&P 500 are down for the year so far, partially on worries about
A report Tuesday morning showed that confidence among consumers is falling
and remains well below where it was before the pandemic, though it remains
stronger than economists expected. That's key because continued spending by
households has been one of the main pillars forcing investors to push out their
predictions for an upcoming recession by another three to six months.
On the losing end of Wall Street were companies in the energy industry.
Exxon Mobil fell 0.9%, as the price of crude oil fell even more steeply amid
worries about demand for fuel.
In the bond market, Treasury yields eased as fears about a possible default
The yield on the 10-year Treasury fell to 3.69% from 3.81% late Friday. It
helps set rates for mortgages and other loans.
The yield on the two-year Treasury fell to 4.46% from 4.57%. It more closely
tracks expectations for what the Federal Reserve will do.
Traders are largely bracing for another hike in short-term interest rates
from the Fed at its next meeting in two weeks, but the hope is that may be the
final one after more than a year of rapid increases.
Higher interest rates help to slow inflation, but they do that by dragging
on the entire economy, raising the risk of a recession and hurting prices for
In markets abroad, European stocks were lower while indexes were mostly
higher in Asia.