Artificial intelligence (AI)-fueled stock indexes on Wall Street are surging to record highs, undeterred by disappointing U.S. inflation and the rise in Treasury debt yields. Economists analyzed the consumer price report for February and found that while “core” CPI inflation fell to its lowest level in nearly three years, the headline inflation rate unexpectedly ticked up to 3.2%. Statistical quirks in official models, such as rent estimates and gasoline prices, were blamed for this early-year anomaly.
Despite the bond market’s disappointment, interest rate futures still lowered expectations for Federal Reserve easing for the year. This led to an increase in both two and 10-year Treasury yields, with the latter rising by over 5 basis points to 4.15%. A poorly received 10-year note auction, influenced by the CPI surprise, may have further contributed to this movement.
However, the enthusiasm for artificial intelligence in the stock market remained steadfast. Oracle, powered by AI, reported better-than-expected results, causing its shares to surge by 12%. The company also hinted at a joint announcement with AI bellwether Nvidia, whose stock recovered from recent losses and experienced a 7% surge. Arm Holdings, another AI darling and British chip designer, saw a 2% gain as trading activity increased after the end of its lockup period following its blockbuster initial public offering.
These AI-driven successes helped push the S&P500 to a new closing high, despite concerns over inflation. The futures market also maintained those gains on Wednesday. Some argue that the resilience of stocks may indicate a preference for an economy that is running slightly hot, even as markets continue to predict Federal Reserve rate cuts in the face of long-term inflation expectations above the 2% target.
Bank of America, in line with this sentiment, raised its S&P500 profit growth forecast to 12% for this year and maintained its raised year-end target for the index at 5,400. Nevertheless, there are skeptics like Jeremy Grantham of GMO who describe the AI phenomenon as a “new bubble within a bubble.”
In China, the stock market experienced a decline as property developers, particularly Country Garden, missed a coupon payment on its debt. The yuan also sharply fell back. In Japan, the Nikkei index fell for the third consecutive session as investors assessed the possibility of a policy shift at the upcoming Bank of Japan meeting. The decision will be influenced by wage growth, with Toyota recently announcing its largest pay increase for factory workers in 25 years, raising expectations for further policy tightening.
While the dollar has seen broader gains and a slight increase against the yen, Bitcoin continued its extraordinary surge, surpassing $73,000 ahead of the upcoming “halving” event next month.
In the realm of politics, U.S. President Joe Biden and former President Donald Trump have both secured their parties’ nominations. This sets the stage for the first U.S. presidential election rematch in nearly 70 years.
FAQ:
Q: What is AI?
A: Artificial intelligence (AI) refers to the development of computer systems capable of performing tasks that typically require human intelligence, such as decision-making, problem-solving, and learning.
Q: What is the S&P500?
A: The S&P500 is a stock market index that measures the performance of 500 large publicly-traded companies listed on U.S. exchanges.
Q: What is inflation?
A: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Sources:
– Bloomberg: https://www.bloomberg.com/
– Nasdaq Stock Market: https://www.nasdaq.com/
FAQ:
Q: What is AI?
A: Artificial intelligence (AI) refers to the development of computer systems capable of performing tasks that typically require human intelligence, such as decision-making, problem-solving, and learning.
Q: What is the S&P500?
A: The S&P500 is a stock market index that measures the performance of 500 large publicly-traded companies listed on U.S. exchanges.
Q: What is inflation?
A: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Definitions:
– AI: Artificial intelligence refers to the development of computer systems capable of performing tasks that typically require human intelligence, such as decision-making, problem-solving, and learning.
– S&P500: The S&P500 is a stock market index that measures the performance of 500 large publicly-traded companies listed on U.S. exchanges.
– Inflation: Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling.
Suggested related links:
– Bloomberg
– Nasdaq Stock Market
The source of the article is from the blog foodnext.nl