Shares of oil and gas companies were among the strongest, as seven out of 10 stocks in the S&P 500 rose. Exxon Mobil rose 3 percent, and oilfield services provider SLB gained 4 percent, as oil prices settled near their highest levels since April.
Financial companies were also strong. JPMorgan Chase rose 1.3% and Wells Fargo climbed 1.6% ahead of the week's results for the Federal Reserve's tests of how big banks would fare in a recession.
But declines in a handful of high-profile stocks offset all those gains, with the spotlight shining brightest on Nvidia's 6.7 percent drop. It was a third straight drop for the chip company, which had soared another 1,000 percent since the fall of 2022.
Almost insatiable demand for Nvidia's chips to power artificial intelligence applications has been a major reason for the US stock market hitting record highs recently, even as economic growth slows under the weight of high interest rates. But the AI boom has been so frenetic that it has raised concerns about a possible stock market bubble and overly high expectations among investors.
Shares of Nvidia have been in retreat since it briefly overtook Microsoft as Wall Street's most valuable last week, dropping nearly 13 percent in just three days. Because Nvidia has become so massive in size, moves in its stock carry additional weight to the S&P 500 and other indexes. It was the heaviest weight in the S&P 500 on Monday.
Other AI beneficiaries also gave up some of their fantastic gains. Super Micro Computer fell 8.6 percent to shave its year-to-date gain below 200 percent to 190.9 percent.
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This rotation between stocks could be a healthy sign for the market, as long as it can hold close to its highs. Market watchers have been concerned to see just Nvidia and a handful of other companies responsible for much of the S&P 500's returns recently. They would prefer a market where many stocks share in the gains.
RXO rose 23 percent after it agreed to buy freight brokerage business Coyote Logistics from UPS for nearly $1.03 billion ($1.55 billion). RXO said the deal will make it the third-largest brokered transportation provider in North America. UPS, which bought Coyote in 2015 for $1.8 billion, rose 1.5%.
Under Armor swung from an early loss to a 2% gain after it said it agreed to pay $434 million to settle charges raised by shareholders related to its accounting and sales practices. The athletic shoe and apparel company denied any wrongdoing in the settlement, but also agreed to separate the roles of chairman and CEO for at least three years.
In the US bond market, Treasury yields edged lower. The 10-year Treasury yield fell to 4.23% from 4.26% on Friday afternoon.
It has been mostly down since topping 4.70 percent in late April, easing pressure on the stock market. Yields have plunged on hopes that inflation is slowing enough to convince the Federal Reserve to cut its key interest rate later this year.
The Fed has kept the federal funds rate at the highest level in more than 20 years, hoping to shrink the economy just enough to control inflation.
Fed officials may be underestimating the extent to which the US economy is slowing, according to UBS economists led by Abigail Watt. They see growth slowing below an annualized rate of 2 percent in the first half of 2024, down from 3.1 percent growth in the fourth quarter of 2023 from a year earlier.
UBS economists say American households in the nation's bottom 40% for income are burning through their savings after using up the cushions they had built up during the pandemic. That could further dampen retail sales, which have been up and down as companies highlight how lower-income customers often struggle to keep up.
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In fact, Wall Street expects a slowdown in the economy, which will reduce upward pressure on inflation and push the Federal Reserve to cut rates. Goldman Sachs economist David Mericle said a rate cut could come as soon as September if inflation reports like the one due on Friday turn out as expected.
The Fed just needs to make sure it cuts interest rates at the right time. If it waits too long, the economic slowdown could lead to a recession. If it is too soon, inflation could reaccelerate.
In other international stock markets, indices rose across much of Europe after falling mainly in Asia.
AP
