Stock market today: AI frenzy leads stocks to rip-roaring first half of 2024

Fears of a US recession now seem like they are from another era, as Wall Street wraps the first half of 2024 close to record highs and with expectations of more gains to come.

The S&P 500 (^GSPC) lost about 0.4% at the closing bell but has logged a near-15% climb for the first half of 2024. The tech-heavy Nasdaq Composite (^IXIC) gave up around 0.7%, with an almost 19% year-to-date advance. The Dow Jones Industrial Average (^DJI) decreased 0.1% Friday. Without the same makeup of Big Tech heavy hitters, it has lagged behind the more tech-heavy indexes so far this year, notching an overall gain of 4%.

A shortened trading week and a relatively slow economic calendar awaits investors as Wall Street takes a pause to celebrate Independence Day on Thursday.

But Monday will bring the first trading day of July and an official start to the second half of the year, with a high bar for Wall Street to clear. The benchmark S&P 500 (^GSPC) index has risen roughly 15% so far this year.

In the months ahead, investors will brace for what many expect to be the Fed's first rate cut, even as the trajectory of the central bank's fight against inflation remains uncertain.

A major economic indicator will arrive later in the week as the Labor Department publishes the June jobs report. How the labor market is faring in the face of higher interest rates is a key concern for central bankers. The next Fed policy decision is scheduled to come at the conclusion of the central bank's meeting on July 31. Even with favorable jobs numbers, the market does not expect any changes from the Fed next month. But forecasts do anticipate the first rate cut arriving in September.

Investors will also get a clearer picture of how the first presidential debate has impacted the race as political elites and the broader public digest the match-up, which was widely seen as a victory for former President Donald Trump.

Yahoo Finance's Brent Sanchez has a graphical breakdown of what to watch next week:

Shareholders getting in on the AI power trade stand to gain from the immense energy demands of AI technology.

But those same demands will have challenging ramifications for the sustainability goals of technology companies — and put a new strain on the power grid.

Already this month, the major heat wave in parts of the Northeast, mid-Atlantic, and Midwest flashed an early preview of a potentially stifling summer that pushed the power grid's load.

Those demands pile onto the nationwide boom in data center development that's leading to a surge in long-term demand for electricity, which has done the impossible — made the utilities trade look hot. With power-hungry AI systems, the energy trade is now the AI trade.

To put AI’s energy needs in perspective, a ChatGPT query, on average, requires almost 10 times as much electricity to process as a Google search does. And if AI companies have their way, users engaging with software powered by large language models (LLMs) will make less energy-hungry — more efficient, you might say — web browsers obsolete.

The projections for AI-led energy demands are so high that technology companies are banking on ambitious energy breakthroughs to offset unsavory emissions and power the future. A literal deus ex machina.

Clean energy projects attracting the attention of AI companies include fusion and geothermal. Other plans would plug massive data centers directly into nuclear power sites.

Critics of AI exuberance point to potential wastefulness and avarice. But others see the AI-driven desperation for clean energy as a catalyst for energy innovation.

If the most profitable and influential tech companies are helping accelerate renewable alternatives — even in the service of their far-fetched AI money machines — is that such a bad thing?

The Supreme Court overruled a 40-year-old legal doctrine that gives federal agencies leeway to interpret laws, a move that could rein in the power regulators have to intervene in many industries.

The decision could strengthen the hand of businesses while reducing the sway of dozens of agencies, from the Environmental Protection Agency to the Food and Drug Administration and the National Labor Relations Board, reports Yahoo Finance's Alexis Keenan.

It is the second instance this week where justices rolled back the influence of regulators.

In another decision Thursday the high court stripped the Securities and Exchange Commission of its ability to impose fines for civil violations while depriving a defendant of a jury trial.

Friday's ruling challenged a four-decade-old legal precedent that had come to be known as "Chevron deference."

That precedent, stemming from a 1984 case involving the oil giant Chevron, stated that judges must defer to a US agency’s "reasonable" interpretations of ambiguously written laws.

The decision settled divided views over the role of federal lawmakers. Chevron’s critics characterized the doctrine as a power grab for the executive branch that handed non-elected agency officials too much authority.

Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Friday.

Uber (UBER): The ride-hailing company and its chief rival Lyft (LYFT) gained 4% and 5%, respectively, following an agreement to settle a lawsuit in Massachusetts that challenged drivers’ employment status as independent contractors. The companies agreed to a series of worker benefits, including a standard minimum wage and sick leave.

Trump Media & Technology Group (DJT): After former President Donald Trump faced off against current commander in chief Joe Biden in the first presidential debate of 2024, shares of the company rose before shedding roughly 2%. Biden's performance was largely seen as unsteady, marked by moments of confusion, giving the impression that Trump had won the night. The company is the parent of Trump's social media platform Truth Social.

Nike (NKE): The sports apparel retailer sank almost 20% Friday afternoon after the company projected a larger-than-expected sales decline in 2025, with an expected 10% fall in the first quarter.

Walgreens (WBA): The pharmacy chain was clinging to the flatline Friday after its stock plunged 22% in the prior session when it reported lackluster earnings and announced plans to close hundreds of stores across the country.

Stocks were flat Friday afternoon as investors digested a new reading from the Fed's preferred inflation gauge that showed pricing pressures continuing to cool, raising the likelihood of a coming rate cut.

The S&P 500 (^GSPC) advanced roughly 0.1% after the benchmark closed a step nearer to its record high. The tech-heavy Nasdaq Composite (^IXIC) lost 0.1%, while the Dow Jones Industrial Average (^DJI) also gained about 0.1%.

The housing market's biggest challenge isn't going away anytime soon.

Economists at Bank of America warned that the housing market will remain "stuck in the mud, and unlikely to become unstuck" until 2026 as the supply of homes for sales remains near record lows.

The so-called lock-in effect for homeowners who secured ultra-cheap mortgages when rates were low during the pandemic has caused owners to stay put.

The investment bank believes the impacts of this could last six to eight years, keeping a lid on housing activity and, in turn, residential investment that feeds into the GDP calculation.

High interest rates have majorly impacted homeownership.

Mortgage rates remain hovering around 7% despite the recent pullback in borrowing costs, keeping supply low and pushing prices higher for homes that do trade hands.

Home prices hit a new record in April, though annual growth slowed from the previous month, according to the latest data available from Case-Shiller. Bank of America expects home prices to grow by about 4.5% this year, 5.0% next year, and 0.5% in 2026.

"Home prices have already overshot their long-run fundamental value based on disposable income," Michael Gapen, an economist at Bank of America, wrote in a note to clients Friday.

"Second, our outlook for the economy calls for continued normalization as the effects of the pandemic move further into the rearview mirror. The structural shift in housing demand that lifted home prices should fade over time. That said, we think it unlikely that home prices fall much."

The case for the first interest rate cut to arrive in a few months just got stronger.

A new reading from the Federal Reserve’s preferred inflation gauge showed prices increased at a slower pace in May. That further solidified expectations that central bankers will begin easing rates later this year.

But despite another positive signal that inflation is easing after running hotter than expected in the first quarter, the central bank isn't likely to cut rates at its next meeting in late July, reports Yahoo Finance's Jennifer Schonberger.

The Fed will likely need more time and evidence that inflation is moving sustainably down to its 2% target, making a first cut later in the year more likely.

"It gives them more confidence that if they needed to they could cut rates, but I don’t think they need to.” said Wilmington Trust bond fund manager Wilmer Stith, noting that economic growth is still strong.

"It’s too early to cut in the next couple weeks."

Here are some of the stocks leading Yahoo Finance’s trending tickers page during morning trading on Friday.

Trump Media & Technology Group (DJT): After former President Donald Trump faced off against current commander in chief Joe Biden in the first presidential debate of 2024, shares of the company rose before shedding roughly 2%. Biden's performance was largely seen as unsteady, marked by moments of confusion, giving the impression that Trump had won the night. The company is the parent of Trump's social media platform Truth Social.

Nike (NKE): The sports apparel retailer sank almost 20% Friday morning after the company projected a larger-than-expected sales decline in 2025, with an expected 10% fall in the first quarter.

Infinera (INFN): Shares of the telecommunications equipment maker surged 17% after Nokia reached an agreement to buy the company for $2.3 billion. The deal values Infinera at a 28% premium over the stock’s closing price on Wednesday.

Chewy (CHWY): The online pet food supplier shed close to 10% following a volatile swing triggered by a post on X, formerly Twitter, by the influential trader Keith Gill, who is known as Roaring Kitty. Gill's account posted a picture of an animated dog on Thursday, without elaboration or context, prompting investors to dive into Chewy. But the sudden climb was matched by a plunge Friday morning, highlighting the sudden and erratic moves of meme stock trading.

US stocks rose on Friday as the latest reading from the Fed's preferred inflation gauge showed inflation continues to cool, raising the likelihood of a rate cut in the months to come.

The S&P 500 (^GSPC) advanced roughly 0.1% after the benchmark closed a step nearer to its record high. The tech-heavy Nasdaq Composite (^IXIC) rose 0.3%, while the Dow Jones Industrial Average (^DJI) gained about 0.1%

The latest reading of the Fed's preferred inflation gauge showed inflation eased in May as prices increased at their slowest pace since March 2021.

The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1 % in May from the prior month, in line with Wall Street's expectations and slower than the 0.3% increase seen in April.

Core PCE was up 2.6% over the prior year in May, in line with estimates and unchanged from the annual increase seen in the last two months. May's reading marked the slowest annual gain in more than three years.

After a shaky debate performance by President Joe Biden, shares of Trump Media & Technology (DJT) are on the move.

As of this writing, shares are up 7.5% in premarket trading.

Be mindful of what you are trading here, folks.

Here is the company's latest 10-Q report, showing a "company" that is doing something and losing a lot of money doing it.

Equally as bad to watch (sort of) as last night's debate is Nike's (NKE) stock premarket, down 14% as of this writing.

The company's guidance was a real letdown, and concerns linger about its management's execution around product innovation. To not see better guidance from Nike in an Olympic year is a red flag.

I liked Stifel analyst Jim Duffy's take on the quarter:

Duffy downgraded his rating on Nike to Hold this morning.