Most of Wall Street is up Tuesday, but a new comeback for Nvidia is keeping the U.S. stock market in check.
The S&P 500 rose just 0.2%, despite gains in the majority of stocks in the index. It’s a slowdown for the market, following Monday’s strong rebound from its first losing week in four.
The Dow Jones Industrial Average was up 483 points, or 1%, as of 2:01 p.m. Eastern Time, and the Nasdaq Composite Index was down 0.2%. All three are still near their all-time highs, but have been shaky recently.
The focus, as usual, was on Nvidia and the other winners of the artificial intelligence frenzy. Their sensational growth is a key reason the U.S. stock market has hit record highs despite a slowing job market and continued high inflation. But their prices have soared so high that critics say they seem overpriced and reminiscent of the 2000 dot-com bubble that eventually burst and cut the S&P 500 nearly in half.
Nvidia fell 2.4% after SoftBank, a Japanese tech giant that was a major investor, said it sold its entire stake last month for $5.83 billion. SoftBank is not abandoning AI. His focus is still on OpenAI, the creator of ChatGPT.
Because Nvidia is so big, worth nearly $5 trillion, it was the heaviest weight in the S&P 500 on Tuesday and held back gains elsewhere in the market.
Nvidia can often dictate the movement of index funds that track the S&P 500, which is at the heart of many 401(k) accounts. A day earlier, Nvidia’s nearly 6% rally was the main reason the S&P 500 erased almost all of its loss from last week.
CoreWeave, whose cloud platform helps customers run AI workloads, fell 14.8% on Tuesday, although it reported a loss for the latest quarter that was smaller than analysts expected. Its revenues also exceeded expectations and financial analysts praised its dynamism. But investors instead seemed to focus on supply chain issues that were delaying data center construction and pushing some of CoreWeave’s revenue further into the future.
On the winning side of Wall Street, BigBear.ai jumped 10.9% after publishing better results for the last quarter than those expected by analysts. It also announced it would buy AskSage, a generative AI platform designed for national security agencies and other highly regulated fields, for $250 million.
Outside of AI, Paramount Skydance soared 9.4%, even as the entertainment giant missed Wall Street’s revenue and profit targets. It was the company’s first earnings report since Skydance completed its acquisition of Paramount in early August, and investors were apparently encouraged that it raised its 2026 cost-cutting target to $3 billion from $2 billion previously.
On foreign stock markets, indices rose in Europe after a mixed result in Asia.
Japan’s Nikkei 225 index slipped 0.1% even as SoftBank rose 2%. In addition to selling its stake in Nvidia, the tech giant also reported earnings well above analysts’ expectations.
On the American bond market, negotiations are closed on the occasion of Veterans Day.
Yields have been generally rising since Federal Reserve Chairman Jerome Powell warned last month that further interest rate cuts were not assured. The Fed has already cut its main interest rate twice this year in hopes of supporting the slowing labor market. But she worries that inflation, which has stubbornly remained above the Fed’s 2% target, could accelerate again.
What could make the Fed’s job more difficult is that the U.S. government shutdown has delayed important updates on employment and other areas of the economy. The Senate has taken steps to end what has become the longest shutdown on record, but that is not assured.
That has the Fed and investors examining reports from sources outside the government that offer a mixed picture.
An employment tracker at Goldman Sachs suggests growth slowed in October compared to September. After taking into account the effect of a deferred resignation program within the government, all American employers could have cut 50,000 jobs in October, according to economist David Mericle.
Such a slowdown in the labor market has traders betting on about a two-in-three chance that the Fed will cut interest rates at its next meeting in December, according to CME Group data. Expectations of such cuts, which Wall Street likes because they can boost the economy and investment prices, are another reason stocks have hit record highs recently.
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AP Business Writers Chan Ho-Him and Matt Ott contributed.
