Most U.S. stocks are down, but the market’s AI engine is firing on all cylinders. The S&P 500 and Nasdaq composite blew past new closing records on Tuesday, powered by a familiar cast of tech companies building out the AI revolution. Nvidia has jumped 4.5% in the past week to a new all-time high, while Meta Platforms is up 24% since Aug. 13, when the S&P 500 had its previous high.
Just about everything else is going down. Shares of healthcare firms, banks, consumer staples, small-cap stocks, and blue chips like the Dow industrials are declining. Less than half of the stocks in the S&P 500 closed above their 200-day moving average on Tuesday, a figure that has steadily declined since August.
The AI powerhouses have grown so vast that many investors see them as immune to higher interest rates. “Tech is almost seen as defensive in some ways,” said Keith Lerner of Truist Advisory Services. Big tech companies like Alphabet, Amazon, Microsoft, and Meta are cash-rich and relatively debt-free, able to grow even when borrowing costs rise.
The combined market cap of the Magnificent Seven closed at a record high of roughly $25 trillion. The tech-stock performance is why indexes continue rising despite a global bond selloff. Meanwhile, the Russell 2000 and the equal-weighted S&P 500 are trailing. Analysts warn the market’s narrow breadth poses a risk, with returns reliant on a small group of stocks.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing