Momentum slowed for US stocks following their roar higher on excitement that inflation appears to be cooling, cuts to interest rates may be coming and the US economy has so far shrugged off predictions for a recession. At the same time, a frenzy around artificial-intelligence technology has catapulted some stocks to stratospheric heights.

Super Micro Computer, which sells server and storage systems used in AI and other computing, jumped another 18.6 per cent Monday. It has surged nearly 1,000 per cent in the last 12 months.

It was the first trading for the stock since an announcement that it will join the S&P 500 index of the biggest US stocks in two weeks. Such a move could drive even more investment in the company.

Super Micro Computer will replace Whirlpool, which is on track for a third straight losing year and will fall back to the S&P 400 index of mid-sized stocks. At the same time, Deckers Outdoor will replace Zion Bancorp in the S&P 500.

The poster child of AI mania is Nvidia, whose chips are powering much of the move into AI. It rose another 3.6 per cent Monday to bring its gain for the year so far to 72.1 per cent after more than tripling in 2023. It was by far the strongest force pushing upward on the S&P 500.

Such spurts are bolstered by a surge in profits and expectations for tremendous growth to continue. But they are also raising worries about another potential bubble as prices whiz at breathtaking speeds.

The market is “euphoric on AI,” according to Savita Subramanian, equity strategist at Bank of America. That can be a concerning signal because too much excitement can push prices too high, leading to disappointment later.

“Bull markets end with euphoria,” Subramanian said in a BofA Global Research report. But the euphoria so far appears to be concentrated in just AI and other select areas, and she raised her target for where the S&P 500 could end this year to 5,400 from 5,000.

Several events scheduled for this week could upset the market.

On Wednesday, the chair of the Federal Reserve will offer testimony before a House of Representatives committee about monetary policy. Wall Street’s hope has been that inflation is cooling enough for the Fed to cut its main interest rate from its highest level since 2001, which would relieve pressure on the economy and financial markets.

A report on Friday will show how the US job market is doing, with economists forecasting a slowdown from January’s strong growth. Resiliency there has kept the US economy out of recession, which in turn should drive profits for companies and support stock prices.

Elsewhere on Wall Street, Spirit Airlines lost 10.8 per cent. JetBlue Airways is ending their proposed $US3.8 billion combination after a court ruling blocked their merger. JetBlue rose 4.3 per cent.

Apple fell 2.5 per cent after the European Union hit it with a fine of nearly $US2 billion for unfairly favouring its own music streaming service over Spotify and other rivals. It was the single heaviest weight on the S&P 500.

Gains were plentiful in other markets. Bitcoin rose above $US67,000 to climb closer to its record of nearly $US69,000. Gold also rose, setting a record. An ounce for delivery in April settled at $US2,126.30.

In the bond market, the yield on the 10-year Treasury rose to 4.21 per cent from 4.18 per cent late Friday.

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Elsewhere in Asia, the spotlight this week is on China’s National People’s Congress, the country’s most important political event. It opens Tuesday and could offer updates on policies to support the slowing economy, resolve troubles in the property market and stabilise financial markets.

With AP

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