The S&P 500 rose 0.4 per cent, coming off its worst week since June, and the Nasdaq composite rallied 1.1 per cent because it's full of technology stocks.
The majority of US stocks outside of AI and tech fell, though, and the Dow Jones Industrial Average swung between losses and gains before finishing with a drop of 36 points, or 0.1 per cent.
In Europe, the losses were sharper, and indexes slid more than 1 per cent following violent protests that could ultimately force the French government to increase its spending to ease voters' anger. That in turn could put even more pressure on bond markets, and yields cranked higher worldwide.
Why borrowing costs are weighing on AI
Even with all the cross currents flowing through financial markets, AI stocks stood out, as they have for most of the past few years. A frenzy in spending for AI technology has forced them to the forefront of the market, sending them to record prices and driving indexes higher.
Last week, AI stocks grabbed the spotlight after tumbling on worries about how expensive it has become to borrow money, which could threaten the boom.
Much of the spending on AI chips and data centres has come from borrowed money, and Treasury yields in the bond market have recently hit their highest levels in years or even decades. That has raised the cost of borrowing money for everyone.
Nvidia added 1.4 per cent Monday and was one of the strongest forces lifting the S&P 500. Because it's the largest stock on Wall Street by total market value, a 1 per cent move for its stock has more effect on the index than any other's.
SpaceX, which controls the xAI business, rose 1.3 per cent to US$147.96. Its founder, Elon Musk, pledged on Monday to give one share of SpaceX to "every kid in America" next year. The offer came after Anthropic said over the weekend that it will commit 5 per cent of the shares in its highly anticipated initial public offering of stock to a new "public benefit" fund.
Big tech profit reports land this week
The swings came ahead of profit reports coming later in the week that could offer more details about the strength of AI-related spending.
Meta Platforms, which is pushing its Muse AI agent, will report its latest quarterly results on Wednesday. Lam Research, which supplies equipment and services for the making of semiconductors, will also talk about how its business is doing on Wednesday.
Expectations are high across the board for US companies' profits from the summer. Analysts are forecasting overall growth of 29 per cent for companies in the S&P 500 from the prior summer, according to FactSet. Those high expectations are what has allowed the US stock market to run to records despite worries about war, high inflation and pressure from the bond market.
All told, the S&P 500 rose 31.29 points to 7,690.73. The Dow Jones Industrial Average dipped 36.38 to 51,966.03, and the Nasdaq composite rallied 290.85 to 26,430.89.
Protests in France push bond yields higher
In stock markets abroad, rebounds for AI stocks helped South Korea's Kospi jump 1.8 per cent to recover some of its 14.5 per cent drop from last week. It is dominated by two huge players in the AI industry, Samsung Electronics and SK Hynix, which has made it much jumpier than other markets.
In Europe, bond yields climbed following the French protests against the rising cost of living and poor school conditions. The protests could put pressure on governments to boost their spending to offer help, but that would likely only add to their already big piles of debt.
Yields rose for French bonds on worries about the government's already strained budget and climbed much more than yields for German government bonds, which investors have historically seen as a safer bet.
In the US bond market, the yield on the 10-year Treasury climbed to 5.14 per cent from 5.09 per cent late Friday. It topped 5.30 per cent earlier this month and touched its highest level since 2002.
Oil prices remained shaky. The price for a barrel of Brent crude, the international standard, swung between US$107 and US$110 through the day before settling at US$109.55, down 0.3 per cent.
It has been yo-yoing between US$97 and US$110 this month on uncertainty about when the war with Iran will allow the energy industry to return to normal.
