Overnight on Wall Street, the S&P 500 slipped 0.3 per cent to pull further from its record set last week. The drops for Nvidia and other winners of Wall Street’s artificial-intelligence boom pulled the Nasdaq composite down 1.1 per cent, while the Dow Jones rose 0.7 per cent.

Stocks of oil-and-gas companies were among the strongest, as seven out of every 10 stocks in the S&P 500 rose. Exxon Mobil climbed 3 per cent, and oilfield services provider SLB gained 4 per cent as oil prices hung near their highest levels since April.

Financial companies were also strong. JPMorgan Chase added 1.3 per cent, and Wells Fargo climbed 1.6 per cent ahead of results coming later in the week for tests by the Federal Reserve of how big banks would fare in a recession.

But declines for a handful of high-profile stocks offset all of those gains, and the spotlight shone brightest on Nvidia’s 6.7 per cent tumble. It was a third straight drop for the chip company, which had rocketed 1,000 per cent higher since the autumn of 2022.

Nearly insatiable demand for Nvidia’s chips to power artificial-intelligence applications have been a big reason for the US stock market’s run to records recently, even as the economy’s growth slows under the weight of high interest rates. But the AI boom has been so frenzied that it’s raised worries about a possible bubble in the stock market and too-high expectations among investors.

Nvidia’s stock has been receding since it briefly overtook Microsoft as Wall Street’s most valuable last week, and it’s down nearly 13 per cent in just three days. Because Nvidia has become so massive in size, the movements for its stock carry extra weight on the S&P 500 and other indexes. It was the heaviest weight by far on the S&P 500 on Monday.

Other AI beneficiaries also gave up some of their fantastic gains. Super Micro Computer dropped 8.6 per cent to shave its gain for the year so far back below 200 per cent, down to 190.9 per cent.

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Such a rotation among stocks could actually be a healthy sign for the market, as long as it can stay close to its records. Market watchers have been worried to see just Nvidia and a handful of other companies responsible for much of the S&P 500’s returns recently. They would prefer a market where many stocks are participating in the gains.

RXO jumped 23 per cent after it agreed to buy the Coyote Logistics freight brokerage business from UPS for nearly $US1.03 billion ($1.55 billion). RXO said the deal will make it North America’s third-largest provider of brokered transportation. UPS, which bought Coyote in 2015 for $US1.8 billion, rose 1.5 per cent.

Under Armour swung from an early loss to a gain of 2 per cent after saying it agreed to pay $US434 million to settle charges raised by shareholders related to its accounting and sales practices. The shoe and athletic wear company denied any wrongdoing in the settlement, but it also agreed to separate the roles of chairman and CEO for at least three years.

In the US bond market, Treasury yields eased a bit. The yield on the 10-year Treasury fell to 4.23 per cent from 4.26 per cent late Friday.

It’s been mostly falling since topping 4.70 per cent in late April, which has relaxed the pressure on the stock market. Yields have sunk on hopes that inflation is slowing enough to convince the Federal Reserve to cut its main interest rate later this year.

The Fed has been keeping the federal funds rate at the highest level in more than 20 years, hoping to grind down on the economy just enough to get inflation under control.

Fed officials may be underappreciating just how much the US economy is slowing, according to economists at UBS led by Abigail Watt. They see growth slowing to below a 2 per cent annualised rate in the first half of 2024, down from 3.1 per cent growth in the fourth quarter of 2023 from a year earlier.

The UBS economists say US households in the bottom 40 per cent of the country for income are burning through their savings after depleting the cushions they had built through the pandemic. That could further slow retail sales, which have been up and down as companies highlight how lower-income customers are often struggling to keep up.

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Wall Street is actually hoping for a slowdown in the economy, one that will take upward pressure off inflation and push the Federal Reserve to cut rates. Goldman Sachs economist David Mericle said a rate cut could happen as soon as September if inflation reports like the one coming up on Friday turn out as expected.

The Fed just needs to make sure it cuts interest rates at the right time. If it waits too long, the economy’s slowdown could careen into a recession. If it’s too early, inflation could reaccelerate.

In other international sharemarkets, indexes rose across much of Europe after mostly falling in Asia.