U.S. stocks rose Monday amid shaky trading for financial markets worldwide, as AI stocks kept swinging and Brazilian stocks tumbled.
The Standard & Poor’s 500 rose 0.7% and more than recovered its losses from last week, pulling within 1.8% of its all-time high set earlier this month. The Dow Jones industrial average added 146 points, or 0.3%, and the Nasdaq composite climbed 0.8%.
The strongest lift for the market came from Nvidia, which rose 2.4%. That helped the chip company recover some of its drop from three straight losing weeks, its longest such streak since June.
But stocks elsewhere in the artificial-intelligence industry remained unsettled. They’ve been swerving on worries about whether their industry’s boom is under threat because of how expensive it’s become for companies to borrow money to build data centers and buy more AI chips.
Meta helps lead the swings
Meta Platforms bounced up and down after outlining plans to raise $35 billion by selling stock to help pay for its AI investments. It also said it could raise another $60 billion by selling shares of a new class of its stock once it begins trading. Meta’s stock initially dropped more than 2%, but it quickly flipped to a gain and then pulled back to a loss of 1.9%.
Meta said Nvidia, Advanced Micro Devices and Broadcom have already indicated they may buy a total of $5 billion of stock in its offering. Those are strong signals of interest from chip companies that stand to benefit from additional AI investments. But they also give fuel to critics of “circular financing” who say it raises the risk if AI isn’t as successful as expected.
One big company at the center of the AI boom, Anthropic, gave details Monday about how much money it’s losing as it prepares to sell its stock on the publicly traded U.S. market for the first time.
Worries remain about borrowing for AI
SpaceX, Elon Musk’s rocket company that also runs the xAI business, had similar swings after it announced a roughly $40-billion deal with an entity managed by Apollo Global Management to lease AI computing power. Its stock initially fell nearly 2% before flipping to a gain of 1.9% and then finishing with a drop of 0.4%.
Musk warned over the weekend that hundreds of companies that rent out AI computing power are under threat because of the difficulty in borrowing money, saying on his social-media platform, X, that they could face “guppy-level death and consolidation.”
CoreWeave, a company that’s borrowed money to buy AI computing power that it rents to customers over the cloud, has been at the center of investors’ worries in recent weeks. On Monday, it dropped 5.5% quickly after trading began, only to flip to a gain of 6.6% before moderating to a rise of 1.8%. Such minute-to-minute swings have become commonplace for it in recent days.
All told, the S&P 500 rose 53.09 points to 7,676.77. The Dow added 146.42 to 52,361.58, and the Nasdaq composite climbed 214.04 to 26,169.38.
It’s a big week for profit reports
Profit reports from huge tech companies this week could offer more details about how spending on AI is going, and whether it’s producing the profits and productivity that proponents promised.
Alphabet and Microsoft will report their latest quarterly results on Wednesday, with Amazon to follow on Thursday.
Companies across all industries are under pressure to report strong growth in their profits. Expectations for big growth are what allowed stock prices to run to records recently despite worries about high inflation, high interest rates and other concerns.
Verizon Communications fell 3.5% even though it reported a stronger profit for the summer than analysts expected, as its revenue fell short of forecasts.
Roughly one out of every three stocks in the S&P 500 is scheduled to report its latest quarterly results this week.
Brazilian stocks tumble
In stock markets abroad, Brazilian stocks fell sharply after President Luiz Inácio Lula da Silva won reelection in a result that surprised investors.
The worry among investors is that he could increase the government’s spending and put more pressure on its debt. The Bovespa stock index in Brazil dropped roughly 14%.
Other governments around the world are also feeling pressure because of high debt loads and strained budgets, including the United States. France has been at the center of the worries recently following violent protests in the country.
But yields on French government bonds eased Monday, and its CAC 40 stock index rose 0.8% for one of the world’s better moves. Indexes also rose in other European markets following a mixed finish in Asia.
The European Central Bank and the Bank of Japan will be meeting to vote on interest rates later this week.
Yields ease before Fed meeting
In the U.S. bond market, yields fell for longer-term Treasurys. The yield on the 10-year Treasury eased to 4.98% from 5.00% late Friday and from more than 5.30% earlier this month.
The two-year Treasury yield rose to 4.71% from 4.69% late Friday. It more closely tracks expectations for what the Federal Reserve will do with overnight interest rates, and the widespread expectation is that it will say on Wednesday that it is leaving the federal funds rate alone following its latest meeting.
The Fed last month hiked the fed funds rate for the first time in three years in hopes of slowing inflation, which has remained much higher than anyone would like.
The price for a barrel of Brent crude swung between gains and losses through the day before settling at $110.74, down 0.9%. It remains near the high end of its range since the war with Iran began. The highest price for the most actively traded contract in the market for Brent crude since then is nearly $120, reached in March.
Choe writes for the Associated Press.
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