NEW YORK (AP) — U.S. stocks are climbing Monday after oil prices eased back.
The S&P 500 rose 0.9% and more than recovered its losses from last week, pulling within 1.6% of its all-time high set earlier this month. The Dow Jones Industrial Average was up 242 points, or 0.5%, as of 11 a.m. Eastern time, and the Nasdaq composite was 1.3% higher.
Stocks got some breathing room after the price for a barrel of Brent crude fell 1.4% to $110.17. It, though, is still near the high end of its range since the war with Iran began. The highest price for the most actively traded contract in the market for Brent crude since then is nearly $120, reached in March.
The pullback for oil prices helped companies with big fuel bills lead the way on Wall Street. Cruise-line operator Royal Caribbean Group rose 2.1%, while United Airlines climbed 3.2% and Delta Air Lines flew 2.3% higher.
Other airline stocks also got a bump on speculation they may benefit from weakness for JetBlue Airways, whose stock tumbled 14.1% toward a record low.
AI stocks keep swinging
Stocks in the artificial-intelligence industry remained unsettled. They’ve been swerving on worries about whether their industry's boom is under threat because of how expensive it’s become for companies to borrow money to build data centers and buy more AI chips.
Nvidia rose 3.1% and was the strongest single force lifting the S&P 500 on Monday. That helped the chip company recover some of its losses from three straight losing weeks, its longest such streak since June.
Meta Platforms, though, swung after outlining plans to raise $35 billion by selling stock to help pay for its AI investments. It also said it could raise another $60 billion by selling shares of a new class of its stock that has zero voting rights, once it begins trading. Meta's stock initially dropped more than 2%, but it quickly erased the loss and then added 0.4%
Meta said Nvidia, Advanced Micro Devices and Broadcom have already indicated they may buy a total of $5 billion of stock in its offering. That's a signal of strong interest from big chip companies that stand to benefit from additional AI investments. But it also gives fuel to critics of “circular financing” who say it raises the risk if AI isn't as successful as expected.
Worries remain about borrowing for AI
SpaceX, Elon Musk’s rocket company that also runs the xAI business, had similar swings. It opened with a loss and then flipped to a gain of 1% after it agreed to a roughly $40 billion deal to lease AI computing power with an entity managed by Apollo Global Management.
Musk warned over the weekend that hundreds of companies that rent out AI computing power are under threat because of the difficulty to borrow money, saying on his social-media platform that they could face “guppy-level death and consolidation.”
CoreWeave, a company that's borrowed money to buy AI computing power that it rents to customers, has been at the center of investors’ worries in recent weeks. On Monday, it dropped 5.5% quickly after trading began, only to flip to a gain of 5.6%. Such minute-to-minute swings have become commonplace for it in recent days.
Expectations are high for profits
Profit reports from several huge tech companies this upcoming week could offer more details about how spending on AI is going, and whether it’s producing the profits and productivity that proponents promised.
Alphabet and Microsoft will report their latest quarterly results on Wednesday, with Amazon to follow on Thursday.
Companies across all industries are under pressure to report strong growth in their profits. Expectations for big growth is what allowed their stock prices to run to records recently despite worries about high inflation, high interest rates and other concerns.
Verizon Communications fell 2.7% even though it reported a stronger profit for the summer than analysts expected, as its revenue fell short of forecasts.
Roughly one out of every three stocks in the S&P 500 is scheduled to report its latest quarterly results this week.
Brazilian stocks tumble following mixed moves in other markets
In stock markets abroad, Brazilian stocks fell sharply after President Luiz Inácio Lula da Silva won reelection in a result that surprised investors.
The worry among investors is that he could increase the government’s spending and put more pressure on its debt. The Bovespa stock index in Brazil dropped 16.1%.
Other governments around the world are also feeling pressure in the bond market because of their high debt loads and worries about strained budgets. France has been at the center of the worries recently following violent protests in the country.
But yields on French government’s bonds eased Monday, and its CAC 40 stock index rose 1% for one of the world’s better moves. Indexes rose in other European markets as well following a more mixed finish in Asia.
The European Central Bank and the Bank of Japan will be meeting to vote on interest rates later this week.
Yields ease ahead of the Federal Reserve's meeting
In the U.S. bond market, yields fell for longer-term Treasurys. The yield on the 10-year Treasury sank to 4.97% from 5.00% late Friday and from more than 5.30% earlier this month.
The two-year Treasury yield edged up to 4.70% from 4.69% late Friday. It more closely tracks expectations for what the Federal Reserve will do with overnight interest rates, and the widespread expectation is that it will say on Wednesday that it is leaving the federal funds rate alone following its latest meeting.
The Fed last month hiked the fed funds rate for the first time in three years in hopes of slowing inflation, which has remained much higher than anyone would like.
AP Business Writers Michelle Chapman and Elaine Kurtenbach contributed to this report.
