NEW YORK (AP) — U.S. stock indexes are rising Monday, recovering from the holiday-season slide that bridged the new year.
The S&P 500 rose 1.3% in midday trading, poised for a second consecutive gain following five straight losses—the longest losing streak since April. The Dow Jones Industrial Average increased by 319 points, or 0.7%, as of 11:30 a.m. Eastern time, while the Nasdaq composite surged 1.9%.
Tech Stocks Lead the Rally
Tech stocks, particularly those involved in artificial intelligence (AI) technology, led the market rally. Nvidia climbed 5.1% ahead of CEO Jensen Huang’s keynote speech at the annual CES convention in Las Vegas.
Despite rising concerns that AI stocks may be experiencing a bubble due to their rapid price increases, the industry continues to highlight its potential. Microsoft, for instance, rose 2% after Vice Chair Brad Smith announced plans to invest approximately $80 billion in AI-enabled datacenters this fiscal year, describing AI as a transformative economic opportunity.
Broader Market Moves
Uber gained 3.1% following its decision to accelerate $1.5 billion in stock buybacks, part of a $7 billion repurchase program. CFO Prashanth Mahendra-Rajah noted that Uber's stock is undervalued relative to its business performance.
In the industrial sector, U.S. Steel climbed 4.2% after filing a federal lawsuit with Japan’s Nippon Steel against President Joe Biden’s decision to block their proposed merger. The lawsuit alleges the decision was politically motivated and lacked sufficient evidence of security concerns.
Economic Indicators and Upcoming Events
This week, markets face a shortened trading schedule due to the National Day of Mourning for former President Jimmy Carter on Thursday. Key economic reports include updates on job openings, service industry health, and the Federal Reserve’s meeting minutes. The week’s highlight will be Friday’s monthly jobs report and consumer sentiment data.
Business confidence has improved since the presidential election, with service sector activity reaching its highest level in nearly three years. "Business activity in the vast services economy surged higher in the closing month of 2024 on fuller order books and rising optimism about prospects for the year ahead," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Interest Rates and Inflation Concerns
The Federal Reserve has been easing interest rates since September to support the economy as inflation approaches the 2% target. However, potential inflationary pressures from incoming tariffs and policies under President-elect Donald Trump remain a concern.
Treasury yields have risen in response, with the 10-year Treasury yield at 4.61%, up from 4.60% late Friday. Higher yields can challenge stock prices by attracting investors to bonds.
Conclusion
As Wall Street recovers from its recent slide, tech stocks, especially those in AI, continue to drive gains. While economic optimism and easing Fed policies offer support, potential inflationary pressures and geopolitical decisions could shape market dynamics. Investors will closely monitor upcoming economic data and policy announcements to navigate the year ahead.
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