The US stockmarket ticked higher on Wednesday, led by its most influential stock, Nvidia.
The S&P 500 rose 0.6% and pulled a bit closer to its all-time high set late last month. The Dow Jones Industrial Average added 129 points, or 0.3%, and the Nasdaq composite gained 0.8%.
Nvidia helped lift the market and climbed 1.6% after Meta Platforms announced a long-term partnership where it will use millions of chips and other equipment from Nvidia for its artificial-intelligence data centres.
AI investment upside
That performance demonstrated the upside of AI development for the US stock market. But investors have also focused on the potential downsides recently, which has led to sharp swings for Wall Street. Worries are rising, for example, about how much companies like Meta are spending on AI and whether they can make back their huge investments through higher profits and productivity in the future.
Meta's stock fell as much as 1.7% before recovering and rising 0.6%.
Another worry is that if AI succeeds in creating tools to do complicated tasks more cheaply, companies in industries as far flung as software and legal services and trucking logistics could see their businesses get undercut. That has pushed investors to suddenly and aggressively punish stocks of companies seen as under threat, and analysts have likened it to a "shoot first-ask questions later" mentality.
Reporting season, economic data paint positive picture
Several profit reports from companies helped to lift stocks Wednesday. They continued what's been a strong reporting season for the big US companies in the S&P 500.
All told, the S&P 500 rose 38.09 points to 6,881.31. The Dow Jones Industrial Average added 129.47 to 49,662.66, and the Nasdaq composite climbed 175.25 to 22,753.63.
In the bond market, Treasury yields ticked higher following reports on the US economy that came in better than economists expected. The yield on the 10-year Treasury rose to 4.08% from 4.05% late Tuesday.
One report said that industrial production improved last month by more than economists expected. Another said orders for computers, fabricated metal products and other long-lasting manufactured goods rose more in December than economists expected, when not including aircraft and other transportation equipment. A third report said homebuilders broke ground on more new homes in December than expected.
Such strong data could encourage the Federal Reserve to keep interest rates steady.
The Fed has put its cuts to interest rates on hold, but many on Wall Street expect it to resume later this year. The widespread forecast is that will come during the summer, after a new chair is scheduled to step in atop the Fed.
Minutes released Wednesday from the Fed's last meeting, though, showed many officials want to see inflation fall further before they would support additional interest rate cuts this year.
Lower rates can give a boost to the economy and prices for investments, but that comes at the cost of potentially worsening inflation.
