NEW YORK — Wall Street’s building frenzy around artificial intelligence helped yank the stock market higher Thursday, even as worries worsen about political rancor in Washington.
The S&P 500 rallied 0.9% after chipmaker Nvidia gave a monster forecast for upcoming sales as it benefits from the tech world's rush into AI. It helped the Nasdaq composite leap 1.7%, while the Dow Jones Industrial Average slipped 35 points, or 0.1%.
Traders work on the floor at the New York Stock Exchange in New York on May 25.
Because it’s one of Wall Street’s most valuable stocks, Nvidia's 24.4% surge was the strongest force pushing upward on the S&P 500. Its forecast of roughly $11 billion in revenue for the current quarter blew past analysts’ expectations for less than $7.2 billion. Nvidia’s stock has already more than doubled this year, and its total value is approaching $1 trillion.
Stocks of other chip makers also charged higher after Nvidia described a race by its customers to put AI “into every product, service and business process.” Advanced Micro Devices gained 11.2%.
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Some Big Tech stocks rallied, adding to recent gains fueled by excitement about AI. The field has become so hot that critics warn of a possible bubble, while supporters say it could be the latest revolution to reshape the global economy. Microsoft gained 3.8%, and Google’s parent company, Alphabet, rose 2.1%.
They helped lift indexes even as the majority of stocks fell on worries about the U.S. government edging closer to a possible default on its debt. Washington could run out of cash to pay its bills as soon as June 1, unless Congress allows it to borrow more.
All told, the S&P 500 rose 36.04 points to 4,151.28. The Dow slipped 35.27 to 32,764.65, and the Nasdaq gained 213.93 to 12,698.09.
In the bond market, yields rallied after reports suggested the economy is in stronger shape than feared.
One said fewer workers applied for unemployment benefits last week than expected. That’s a signal the job market remains remarkably solid, even as manufacturing and other areas of the economy slow under the weight of much higher interest rates.
Another report estimated the U.S. economy grew at a 1.3% annual pace in the first three months of the year, stronger than the 1.1% earlier thought.
Stock markets abroad were mostly weaker, but the declines were milder than the prior day’s.
Germany’s DAX lost 0.3% after data showed its economy shrank in the first three months of the year, the second straight quarter that’s occurred.
Hong Kong’s Hang Seng fell 1.9% amid worries China’s economic recovery after the government relaxed pandemic restrictions is losing steam. Stocks in Shanghai slipped 0.1%.
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead
Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead
The stock market has long been the go-to choice for people looking to invest their money. But that could be about to change as a younger generation enters the scene.
According to a recent survey from Bank of America, individuals aged 21 to 42 with at least $3 million in assets only have 25% of their portfolio invested in stocks. For wealthy investors over age 43, the allocation to equities is much higher at 55%.
The recent market volatility may have something to do with these millennials' decisions.
"We've had a very strong run in the stock market over the last decade and are now living through volatile times. That's on the front of people's minds," says Jeff Busconi, chief operating officer at Bank of America Private Bank, in an interview.
Despite the stock market's recent bounce, the benchmark S&P 500 Index is still down around 9% over the last year.
Busconi adds that the younger generation of investors increasingly believes that "a traditional portfolio of stock and bonds is not going to deliver above-average returns over time."
Moneywise reviewed news reports, industry surveys, and other material to identify the assets rich millennials favor.
Real estate
Real estate has been a popular asset class as of late — perhaps because it's a well-known hedge against inflation.
As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
It's no surprise that high-net-worth individuals — regardless of their age — see opportunity in this asset.
In the Bank of America survey, 28% of younger people said real estate presents great growth potential; 31% of the older group held the same opinion.
But you don't need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that can get you started on becoming a real estate mogul.
Cryptocurrency
Once considered a niche asset, cryptocurrency has now entered the mainstream. A study from the CFA Institute earlier this year showed that 94% of state and government pension plans have invested in cryptocurrencies.
Of course, many investors learned about cryptocurrencies' volatility the hard way through this year's massive pullback. But some wealthy millennials still believe in the asset class.
In the Bank of America survey, 29% of younger people said crypto offers great opportunities for growth, while only 7% of the older group agreed.
Unsurprisingly, younger folks also have a lot more exposure to crypto (average allocation of 15% of their portfolio) than the older generation (average allocation of 2% of their portfolio).
It's easy to get in on the action — there are plenty of platforms that allow you to invest in crypto. Just be aware of fees: many exchanges charge up to 4% in commission fees just to buy and sell crypto. But some investing apps charge 0%.
Private equity
Private equity refers to investments in companies that are not publicly traded on a stock exchange.
A private equity fund takes money from the fund's investors, invests the money into the companies — usually by taking controlling stakes — and works with the companies' management teams to make their businesses more valuable. The goal is to sell their portfolio companies later — hopefully for a decent profit.
While private equity funds are generally not open to small investors, they've been gaining popularity among the wealthy.
In 2021, private equity buyouts doubled from 2020 to $1.1 trillion, according to Bain & Company.
This investment class has also received the attention of high-net-worth millennials.
The Bank of America survey suggested that 25% of individuals aged 21 to 42 with at least $3 million in assets identified private equity as one of the greatest growth opportunities, compared to 15% for those who are older.
This story originally appeared on Moneywise and has been independently reviewed to meet journalistic standards.
