Stocks are little changed Monday after record-setting week: Live updates

US stocks took a breather on Monday after closing out a dizzying week at record highs as investors braced for a looming inflation update that could put that rally to the test.

The Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) wavered around the flatline on the heels of notching new closing highs. The Nasdaq Composite (^IXIC) was little changed following a stellar week for tech stocks.

New inflation data in the coming days will test the staying power of the breakout rally that followed Nvidia’s (NVDAresults. A hotter-than-expected CPI report spooked the market and sparked a stock sell-off earlier in February, and investors are already weighing the chances of a surprise in Thursday’s PCE index reading.

Given the PCE index is the Federal Reserve’s preferred inflation gauge, the reading will factor into the ongoing debate on the timing of a rate cut, already pushed back.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

The inflation report is the highlight of this week’s data, with temperature checks on the consumer and manufacturing also on deck. What they say about the health of the US economy may determine whether the bullish mood in stocks continues.

Berkshire Hathaway (BRK-Bclosed in on a $1 trillion market value after the Warren Buffett-led conglomerate posted a record annual profit for the second year in a row. In his annual letter to shareholders at the weekend, Buffett said Berkshire is “built to last” and paid tribute to the part played in that by his right-hand man, Charlie Munger.

Elsewhere in corporate results, Domino’s Pizza (DPZ) shares popped about 8% after the

The next AI stock plays: fast-food

The search for AI derivative plays on Wall Street is well underway, trust me.

To make life easier for you, here is one space to start your homework on: fast-food.

I am prepping for an interview with the CEO of a very large restaurant chain today. They boast around 30 million plus rewards members. These are loyal folks of the brand logging onto this restaurant’s app and ordering food and hoping to get something free or something unexpected. Said restaurant is installing new AI software to better mine the data from these loyal rewards member.

The buzzword by them and others in the fast-food space: suggested selling. In other words, tapping into data using new technology to upsell you or to order more frequently. Starbucks has led the way in this, but it’s starting to spread like wildfire in the space.

It’s a major potential value unlock for fast-food players. And so is the use of AI tech inside the restaurant, say to scan if food is being weighed and priced correctly.

I think talk of AI on its earning call today is lifting shares of Domino’s Pizza (DPZ). The company’s same-store sales recovery appears underway, but this AI talk from the earnings call caught my attention (note Domino’s is seen as the first to really pioneer the use of tech in the fast-food industry):

restaurant and delivery chain lifted its dividend and beat fourth quarter sales

From Domino’s CEO Russell Weiner:

“The answer to your Microsoft question is, we’re working really we’re working really in two areas with Microsoft and Genitive AI. One is on the consumer ordering side. We are not waiting for the new website to come in to see something on that. So you’ll see something on that in 2024. And then also on the store side and what can we do with Genitive AI to make the experience better on our team members in store.”

Li Auto stock surges on first ever annual net profit, EV peers jump

Shares of Li Auto (LI) jumped more than 14% on Monday after the Chinese electric vehicle maker beat fourth-quarter earnings expectations.

The company reported its first-ever annual net profit, delivering 131,805 vehicles in the quarter —representing a 184.6% year-over-year increase.

Gross margin was 23.5% in the fourth quarter of 2023, up from 20.2% during the same period in 2022.

Electric vehicle peer stocks also rose on Monday. XPeng (XPEV) was up more than 7%. NIO (NIO) American Depository Shares (ADRs) rose more than 5%.

US rival Tesla (TSLA) jumped roughly 4% during the session.

The Dow’s Amazon-Walmart-Walgreens shakeup is a reminder why it’s no longer the benchmark

On Monday Amazon (AMZN) replaces Walgreens (WBA) on the Dow Jones Industrial Average, following a move by Walmart (WMTto split its stock 3-for-1.

Yahoo Finance contributor Allan Sloan points to the Dow’s triple play involving Walmart, Walgreens, and Amazon as an example of how creaky and cumbersome the ancient Dow Jones Industrial Average (^DJI) has become compared with modern market metrics.

The swap was done to keep retail companies’ weight in the average from falling sharply because of Walmart’s stock split.

Stocks slightly higher ahead of data-packed week

Stocks drifted slightly higher on Monday following a dizzying week of record levels. The Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) opened little changed after notching new all-time high closings. The Nasdaq Composite (^IXIC) rose slightly following a stellar week for tech stocks.

Investors await the latest Personal Consumption Expenditures (PCE) index due for release on Thursday. The reading is the Federal Reserve’s preferred inflation gauge.

The print will test the staying power of the breakout rally spurred by Nvidia’s (NVDAresults last week.

Data on ISM manufacturing, mortgage applications, and home sales are also expected this week.

Everything rallies, but should it?

Nvidia shares ripped 15% higher last Thursday after earnings. The report sent the broader market ripping higher too.

Nvidia rivals AMD (AMD) and Arm (ARM) saw strong bids. New hot Yahoo Finance ticker Super Micro Computer (SMCI) exploded by 36%. Even Intel (INTC) caught some Nvidia tailwinds. And shares of Meta (META), which has been out in front in buying Nvidia chips, shot higher as well.

Doesn’t this all look insane and feel akin to blind buying by FOMO traders?

In a normal functioning market, Nvidia doing amazingly is bad news for competitors such as AMD and Intel. Nvidia is selling more of its chips, meaning fewer sales opportunities for rivals. Shouldn’t their stocks drop?

To be fair, this feels like a much different bubble than the cannabis and crypto stock bubbles of years gone by, as tech giants like Nvidia (NVDA) and Microsoft (MSFT) have real money-minting business models. Their leaders also aren’t inexperienced dopes (see the cryptosphere’s bad actors of the last two years).

But make no mistake: We are in a bubble, and it could end badly at some point.

Here are some of the elements I see to support this view.

 

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