(Bloomberg) — Stocks closed at all-time highs as Alphabet Inc.’s results showed solid demand for artificial intelligence, bolstering confidence in the technology that has powered the bull market. Signs of jobs strength ahead of next week’s Federal Reserve decision lifted Treasury yields.
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Following a 28% surge from its April lows, the S&P 500 eked out a gain while notching its 10th record in 19 trading days. Google’s parent AI optimism fueled a rally in companies like Nvidia Corp., which hit a fresh peak. Tesla Inc. sank 8.2% as Elon Musk warned of difficult times ahead. In late hours, Intel Corp. gave an upbeat sales forecast as personal-computer demand picked up.
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The S&P 500’s record-setting spree may be stoking concerns about inflated share prices and a revival of meme-stock froth, but JPMorgan Chase & Co.’s trading desk isn’t concerned. Rather, it expects the rally in US equities to keep going.
Bonds dropped for a second day, with 10-year yields rising three basis points to 4.41%. Traders slightly pared bets on US rate cuts, projecting less than two reductions this year.
Donald Trump and Federal Reserve Chairman Jerome Powell traded barbs over the central bank’s renovation project during a tour of the construction site, with the US president also using their interaction to again push for lower interest rates.
US jobless claims fell for a sixth straight week – the longest stretch of declines since 2022. The characterization of the labor market will be a key feature of next week’s Fed meeting.
“There are still few signs of major cracks in the labor market,” said Chris Larkin at E*Trade from Morgan Stanley. “And if that picture remains intact, the Fed has one less reason to cut interest rates.”
Trading desks at firms including Goldman Sachs Group Inc. and Citadel Securities are telling clients to buy cheap hedges against potential losses in US stocks as a slew of risks loom over the market’s record advance.
US margin debt, a measure showing how much investors are borrowing to buy stocks on the New York Stock Exchange, is starting to run too hot — a potentially concerning sign for the credit market, according to credit strategists at Deutsche Bank AG.
The market euphoria may continue if there are unexpected tariff reductions or a more dovish stance by the Fed than investors anticipate, the strategists said.
The world’s investors are enjoying a confidence boost after months of uncertainty as Trump finally started signing trade deals. Earlier this year, rapidly-shifting tariff policies sent global markets spiraling. But risk assets have rebounded as investors saw signs of progress in negotiations.
Trump suggested he would not go below 15% as he sets reciprocal tariff rates ahead of an Aug. 1 deadline.
US stocks face near-term risk as the market is too complacent about tariffs and the related backlash, according to BNP Paribas Asset Management strategist Chi Lo.
While some investors are concerned about “frothiness,” Craig Johnson at Piper Sandler says that, from a technical point of view, that this is not the case when looking “down-cap” from the heavy-weights in the S&P 500 and Nasdaq indices.
“We believe that this bull market is broadening out in terms of participation,” he said.
The NYSE advance-decline line, which tracks the number of securities rising minus the number falling on the exchange each day, this week hit fresh highs.
Corporate Highlights:
Alphabet Inc.’s Google inked a deal worth more than $1 billion to provide cloud-computing services to software firm ServiceNow Inc., a win for Google Cloud’s efforts to get major enterprises onto its platform.
International Business Machines Corp. reported weaker-than-expected sales in its closely watched software segment, disappointing investors who have grown increasingly optimistic about the business.
Microsoft Corp. said a Chinese hacking group is exploiting security vulnerabilities in the company’s SharePoint servers to deploy ransomware, following a cyberattack discovered last week that has affected hundreds of entities around the world.
UnitedHealth Group Inc. is responding to criminal and civil requests from the US Department of Justice about its Medicare practices, the company said, confirming reports of probes that have added to mounting challenges for the largest US health insurer.
Union Pacific Corp., North America’s largest railroad, is in advanced discussions with Norfolk Southern Corp. about a potential tie-up in what would be the industry’s largest deal ever.
American Airlines Group Inc. scaled back its earnings outlook amid deep fare discounts offered to woo reluctant travelers back on flights during a slump in consumer demand.
Southwest Airlines Co. expects economic turmoil to erase as much as $1 billion of its annual pre-tax profit this year, prompting the US airline to offer shareholders a much-reduced outlook for 2025.
Union Pacific Corp., North America’s largest railroad, is in advanced discussions with Norfolk Southern Corp. about a potential tie-up in what would be the industry’s largest deal ever.
Dow Inc. slumped after the chemical company reported its first quarterly loss in five years as trade and tariff uncertainties weighed on volumes.
T-Mobile US Inc., the nation’s second-largest wireless provider, reported more new subscribers than analysts were expecting in the second quarter, overcoming a sluggish start to the year.
Chipotle Mexican Grill Inc. cut its annual outlook for the second time this year, suggesting that honey chicken and burrito giveaways haven’t been enough to offset a traffic slump that the company attributed to economic anxiety.
Blackstone Inc. reported a 25% jump in distributable earnings for the second quarter, buoyed by profits from its retail and evergreen funds.
ServiceNow Inc. gave a strong outlook for revenue growth in the third quarter and touted customer adoption of its artificial intelligence software tools.
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 4 p.m. New York time
The Nasdaq 100 rose 0.2%
The Dow Jones Industrial Average fell 0.7%
The MSCI World Index rose 0.2%
Bloomberg Magnificent 7 Total Return Index fell 0.2%
The Russell 2000 Index fell 1.4%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.1% to $1.1759
The British pound fell 0.5% to $1.3508
The Japanese yen fell 0.3% to 146.93 per dollar
Cryptocurrencies
Bitcoin rose 0.9% to $119,052.72
Ether rose 4.7% to $3,737.51
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.41%
Germany’s 10-year yield advanced six basis points to 2.70%
Britain’s 10-year yield declined one basis point to 4.62%
Commodities
West Texas Intermediate crude rose 1.5% to $66.20 a barrel
Spot gold fell 0.5% to $3,370.69 an ounce
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