Stock market today: Wall Street drifts as Nvidia keeps climbing

By STAN CHOE
AP Business Writer

NEW YORK (AP) — U.S. stocks are drifting Thursday as Wall Street’s momentum cools following its latest record-setting day.

The S&P 500 was edging up by 0.1% in early trading a day after leaping to set an all-time high for the 25th time this year. The Dow Jones Industrial Average was down 18 points, or less than 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was up 0.2% a day after hitting its own record.

Lululemon Athletica climbed 5.2% after reporting better profit for the latest quarter than analysts expected, in large part because of strong growth in sales outside the Americas. J.M. Smucker rose 4.2% after the company behind Uncrustables and Jif peanut butter likewise topped profit expectations.

Nvidia rose another 2.4% a day after its total value topped $3 trillion, as it keeps riding a tidal wave of enthusiasm for artificial-intelligence technology. The chip maker’s gain for the year is now above 153%.

They were helping to offset a 15.9% tumble for Big Lots, which reported a larger loss for the latest quarter than expected. The retailer said it missed targets for sales because its customers are continuing to pull back on their spending, particularly for things that aren’t essentials.

Another retailer, Five Below, gave more discouraging comments about how its customers are doing. Its profit and revenue last quarter fell short of analysts’ expectations, and CEO Joel Anderson said struggles for the company’s core lower-income customers dragged on results, even as it saw strong growth from its higher-income customers. Five Below’s stock fell 17.2%.

Many retailers and other companies have been highlighting a split between their customers making lower and higher incomes. Inflation is particularly hurting those at the lower end, who are struggling to keep up with a cost of living that’s still rising, even if not as fast as before. That threatens to crack a linchpin that’s kept the U.S. economy out of a recession despite high interest rates: strong spending by U.S. households.

Another factor that’s helped U.S. consumer spending stay so strong has been a remarkably solid job market. But a report on Thursday showed some potential softening there as well.

More U.S. workers applied for unemployment benefits last week than the week before, when economists were expecting to see a slight decline. The numbers are still low compared with history, but they could suggest some slowing in the job market.

Wall Street is actually hoping for just such a slowdown. That’s because a cooldown can drive inflation lower and convince the Federal Reserve to deliver the cuts to interest rates that traders desire so much. The danger is if the slowdown for the economy overshoots and turns into a recession, which would ultimately hurt stock prices.

In a potentially discouraging signal for markets, a separate report on Thursday said the productivity of U.S. workers wasn’t quite as strong in the first three months of the year as economists thought. That’s key because strong productivity gains could allow wages for U.S. workers to keep rising without adding as much upward pressure on inflation.

After the economic reports, Treasury yields were holding relatively steady. The yield on the 10-year Treasury rose to 4.29% from 4.28% late Wednesday.

The two-year yield, which moves more on expectations for Fed action, ticked down to 4.72% from 4.73%.

The week’s big event will arrive on Friday, when the U.S. government offers the latest monthly update on the job market. Economists expect it to show slight accelerations in hiring and average hourly wage gains from the month before.

As of now, virtually no one expects the Federal Reserve to make any move on interest rates at its meeting next week. But the hope is still for the Fed to cut its main interest rate at least once this year, down from its highest level in more than two decades.

The European Central Bank on Thursday became the latest in the world to cut its own interest rates. The bank’s president, Christine Lagarde, said inflation there had eased enough to begin lower rates but declined to say how the future path lower would look.

Stock indexes rose modestly in Europe following the widely expected decision. They were mixed in Asia, with indexes up 0.6% in Tokyo, down 0.5% in Shanghai and closed for trading because of a holiday in Seoul.

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AP Writers Matt Ott and Zimo Zhong contributed.