The S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) closed at record highs on Wednesday, buoyed by tentative optimism for interest rate cuts amid signs of slowing labor demand and a cooling economy.

The S&P 500 rose about 1.2% to close at a record 5,354. Meanwhile, the tech-heavy Nasdaq Composite led the gains, popping nearly 2% to hit a record close of 17,187

The state of the consumer has remained a hot-button issue for the past year.

Recent warnings from companies like McDonald's (MCD) and Starbucks (SBUX) about price-conscious consumers have added to the growing case some have made about a potential slowdown in consumer spending. A revision lower in personal consumption within first quarter GDP data and weaker-than-expected April retail sales have also added to the case.

But the broader question remains whether consumers still have enough left in the tank to keep spending throughout 2024.

A deep dive on the consumer led by Barclays senior US economist Jonathan Millar argues there's more spending coming down the pike even if there is a shift to "value-focused spending."

"US consumers are holding steady (still)," Millar wrote. "We acknowledge there are some adjustments in spending, but we are far from sounding any alarms. Various credit metrics show deterioration, but we do not view these as imminent indicators that aggregate spending is set to weaken."

Millar notes that while some studies have claimed pandemic-driven excess savings are gone, that might not fully be the case. Millar estimates consumers still have $850 billion in excess savings. And even with Americans spending about $50 billion per month from their excess savings, it would take another 17 months for the entire excess savings nest egg to expire.

"Households are still comfortable dipping into savings to support income," Millar said. "In our view, there is plenty of scope for this to continue."

Arm (ARM) stock was up more than 6% on Wednesday afternoon as investors are increasingly bullish on the chipmaker's position in the growing artificial intelligence market.

Yahoo Finance's Dan Howley reports:

Intel (INTC) and AMD (AMD) are staring down a new competitor in the PC market: Arm.

The UK-based chip designer is making a fresh push into the space via Qualcomm (QCOM) and its Arm-based Snapdragon X Elite and X Plus chips, which are rolling out in laptops from companies ranging from ASUS and Acer to Dell, HP, and Lenovo in the coming weeks.

Arm is already the go-to platform for Apple (AAPL) and its M-series chips for its Mac line of laptops and desktops, but it’s had a rockier relationship with Microsoft’s (MSFT) Windows platform. There was 2012’s Surface RT, which couldn’t run certain apps, as well as 2022’s Surface Pro 9, which suffered similar compatibility problems.

But Microsoft, Arm, and Qualcomm say they’ve worked out the kinks — and that Arm-based PCs will be as reliable as Intel and AMD-based offerings. The proof? Microsoft turned to Arm-based Qualcomm chips to power its new Surface Pro tablet and Surface Laptop, rather than Intel or AMD processors.

Those Surface devices are part of Microsoft’s new Copilot+ PC standard, which essentially involves high-end laptops that can run native artificial intelligence apps, making the fact that Microsoft used Arm-based Qualcomm chips all the more interesting.

“The Microsoft Build moment, with Microsoft basically coming out and sort of anointing or declaring that the Snapdragon X Elite and the Qualcomm-based, Arm-based devices were the first to meet [Microsoft’s] Copilot+ standards, was a big inflection,” explained Daniel Newman, CEO of the Futurum Group.

“It was just a bit of a sea change that we haven't seen in a long time in the industry,” he added.

It's all about tech in the stock market on Wednesday.

As seen below, Technology (XLK), which is up nearly 2% on the day, is the only one of the 11 sectors outperforming the benchmark S&P 500 on the day.

This has spawned a broader rally in the tech-heavy Nasdaq Composite (^IXIC) which is up 1.6% on Wednesday compared to the 0.9% gain seen in the S&P 500 (^GSPC). The moves higher come as the 10-year Treasury yield declined again on Wednesday, hitting 4.3%, its lowest level since early April.

Double-digit gains in both CrowdStrike (CRWD) and Hewlett Packard Enterprises (HPE) after positive earnings contributed to the rally in tech.

Shares of Alphabet (GOOG, GOOGL) were up about 0.6% in midday trading Wednesday as the company announced it is hiring a new CFO.

Yahoo Finance's Hamza Shaban reports:

As Google pivots to incorporate AI technology across its array of services, its parent company, Alphabet, is bringing on a new CFO.

, a 23-year veteran of the pharmaceutical company Eli Lilly (LLY), will become the CFO and senior vice president of Google and Alphabet at the end of next month, the tech giant announced Wednesday.

The move comes at a pivotal moment for Google. The two-trillion-dollar tech company is waist-deep in a transition to harness the power and excitement around generative AI. It’s churning out huge investments in data centers and infrastructure and is retooling flagship products to claim turf in the burgeoning market for AI tools. The digital advertising king aims to be the dominant player in the next era of computing.

Ashkenazi comes to Google after overseeing a period of staggering growth. Eli Lilly’s share price has surged close to 700% over the past five years. Among its newer products are Mounjaro and Zepbound. Both medicines are from the increasingly popular class of drugs that lower blood sugar and promote weight loss.

Ruth Porat, who has served as Google’s CFO since 2015, was promoted to president and chief investment officer last year. She will oversee investments in Other Bets, as well as regulatory matters and international expansion.

The pay gap between job stayers and job changers narrowed in May in the latest sign that the US labor market is cooling from a hot start to 2024.

New data from ADP released Wednesday showed that the median year-over-year pay increase for job switchers fell to 7.8% in May from a recent spike of 8.3% in March and 8% in April. The gap between pay gains for job changers and those of job switchers, which grew at a 5% pace in May, is at its lowest level since February and a far cry from 2022-2023 levels.

"We've seen that people's willingness to jump from job to job has really declined over the last two years," ADP chief economist Nela Richardson said on a conference call with reporters Wednesday morning.

Richardson noted that the trend of fewer people leaving their jobs for a big pay bump isn't new, as she and other economists have been tracking the shift from the "Great Resignation" to the "Great Stay." But recently, there have been other changes. Companies are focusing more on retaining and training workers rather than recruiting, and consequently, prospective workers are finding it harder to land new jobs.

"When I talk to employers, their narrative has changed a lot over the last year," Richardson said. "Instead of being totally focused on hiring and replacing workers, they're really focused on productivity, getting the most out of the workforce, and having a workforce that is engaged."

Richardson added that workers are still finding jobs. It just seems "it's taking a bit longer."

Read more here.

Nvidia (NVDA) shares hit another record intraday high shortly after the opening bell as investors push the stock up on hopes for relentless demand for AI chips.

But that doesn’t mean investors should pile in and chase the AI trade.

In fact, industry insiders are pushing for a reality check.

I had the chance to sit down with Nutanix (NTNX) CEO Rajiv Ramaswami at BofA’s Global Tech Conference, and while he’s excited about AI’s growth prospects, he warned that “AI investments have gotten ahead of reality.”

“There has to be a valid business case … to justify the cost of AI investments. There's a little bit of a disconnect between those two right now,” Ramaswami told me.

The fallout, Ramaswami said, will likely result in a lot of startups losing their value. He also added, “There could potentially be a slowdown in the level of investment dollars in terms of these massive build-outs.”

Ramaswami is not alone in cautioning that the current outlook is unrealistic.

Pure Storage (PSTG) founder John “Coz” Colgrove told me expectations are “overhyped” in the short term.

“AI is going to be transformative, but it is going to take a little longer than people think. What they think will happen over the next 10 years is probably going to take 25 years. It's going to happen, but it takes a little longer to build out the infrastructure and to really get the effects everywhere,” Colgrove said.

Yes, talks of an AI bubble are resurfacing once again.

Nvidia's (NVDA) stock rally keeps rolling.

The chipmaker's stock rose about 3% on Wednesday morning, hitting a new ecord high just shy of $1,200 a share. The move comes just days before the company enacts a 10-for-1 stock split.

Shares are now up nearly 35% in the past month as Wall Street has grown even more bullish on the company's AI prospects after its latest earnings report.

Economic activity in the services sector returned to expansion in May, after contracting for the first time in nearly two years during the month of April.

The Institute for Supply Management's services PMI registered a reading of 53.8 in May, up from 49.4 in April and higher than the 51 print that economists expected, according to Bloomberg data.

Any reading above 50 reflects the sector is in expansion territory.

Elsewhere in the release, the measure for prices paid decreased to 58.1 from 59.2 in the month prior. Meanwhile, those for new orders and employment ticked higher. Notably, though, the employment reading of 47.1 reflected that the index remained in contraction territory.

“The increase in the composite index in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment," ISM Services Business Survey Committee chair Anthony Nieves said in a release. "Survey respondents indicated that overall business is increasing, with growth rates continuing to vary by company and industry."

He added: "The majority of respondents indicate that inflation and the current interest rates are an impediment to improving business conditions.”

US stocks popped on Wednesday, buoyed by tentative optimism for interest rate cuts amid signs of slowing labor demand and a cooling economy.

The S&P 500 (^GSPC) rose 0.4%, while the tech-heavy Nasdaq Composite (^IXIC) led the gains, popping 0.7%. Meanwhile, the Dow Jones Industrial Average (^DJI) gained about 0.2%.

The moves come as hopes for a Fed shift appear to be growing. According to the CME FedWatch tool, about 65% of traders now expect policymakers to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago.

The AI chip craze is expected to bring big business to Lam Research (LRCX).

The chip supplier, whose customers include Intel (INTC), Samsung, and Taiwan Semiconductor (TSMC), foresees its high-bandwidth memory business tripling this year and expects “even stronger” demand in 2025.

“Frankly, I see continued strength for the foreseeable future,” Lam Research CFO Doug Bettinger told me inside Bank of America’s Global Technology Conference late Tuesday. “The opportunity in front of this industry and the opportunity in front of Lam specifically is amazing,” Bettinger added.

This week, Bank of America analysts raised their price target on the stock to $1,100 while maintaining a Buy rating.

Analyst Vivek Arya (who also struck a bullish tone on Nvidia on Yahoo Finance Live yesterday) noted that while chip equipment makers are currently trading at a premium relative to historical levels, he and his team believe valuation is justified in part due to AI leading to record levels of wafer fab equipment (WFE) intensity.

The company's recently approved 10-for-1 stock split, along with a new $10 billion share buyback, reignited investor excitement last month.

However, Lam remains an underperformer compared to rivals. The stock is up 18% this year versus Applied Materials' (AMAT) 31% surge and ASML Holding's (ASML) 26% climb.

Amid a five-day rally, Apple's (AAPL) stock is taking dead aim at breaking through its late January closing high of $195.75 ahead of WWDC this coming Monday.

Morgan Stanley analyst Erik Woodring is out with a great deep dive into what's expected from the event and Apple's stock price around WWDC.

Sa Woodring:

I am still on GameStop (GME) stock watch.

Shares are down about 1% premarket following a 5.36% slide on Tuesday. The stock is off by 36% from the highs hit on Monday after Roaring Kitty's post.

I did a special taping of my "Opening Bid" podcast yesterday afternoon, 100% focused on GameStop. Check it out below. I came away wondering if maybe I am thinking about this stock entirely the wrong way!