Stocks continued their record-setting ways. Plus, VC firms are playing both sides of the gambling industry. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

By Connor Smith | Thursday, July 10

Zen. A broad market rally plus AI-stock buying combined to push two of the three major indexes to record closes.

The S&P 500 rose 0.3% to top Friday's record close by about a point. The Nasdaq Composite, which hit a record yesterday, rose 0.1% to build on that milestone.

The Dow Jones Industrial Average actually led the pack with a gain of 0.4%, but it's still a few hundred points, or 0.8%, away from its Dec. 4 closing high of 45,014.04.

AI stocks continued to roar higher, with the iShares Semiconductor ETF rising 1% and Nvidia finishing with a market cap north of $4 trillion. Yesterday it became the first U.S. company to cross that threshold, and today it was the first to finish the day there.

It wasn't just the AI show, though. Big days for American Express, McDonald's, Goldman Sachs, JPMorgan Chase, and Caterpillar helped propel the Dow. Only 10 of 30 stocks in the index were down, and its laggards included some of the smaller stocks in the stock-price-weighted index.

Nine of the 11 major S&P 500 sectors rose, and eight were up more than 0.5%. Communication services and technology were the only sectors that lagged, as Wall Street sold software stocks like Autodesk and Palo Alto Networks.

Mizuho's Daniel O’Regan flagged worries about software firms facing competition from AI.

“Many are saying it’s one of the main reasons why Software is lagging so much,” he writes.

Whatever the cause, the rest of the market is cruising along. Traders are ignoring the risks that President Donald Trump moves forward with the bulk of the tariffs he's promised for Aug. 1. Concerns about higher prices and weakness in the economy have faded from the foreground.

The CBOE Volatility Index, or VIX, fell to 15.78, its lowest levels since February. It's not surprising the market's fear gauge is zen during a week in which the economic calendar has been barren. But big banks will kick off earnings season next week, and the market is priced for perfection.

It feels a lot like last year, when the Nasdaq was cruising heading into second-quarter earnings in July—until a weaker-than-expected employment report in early August sent stocks briefly tanking.

That time around, things were better than they looked. Wall Street is betting big that's still the case. More on betting below...

DJIA: +0.43% to 44,650.64
S&P 500: +0.27% to 6,280.46
Nasdaq: +0.09% to 20,630.66

The Hot Stock: United Airlines +14.3%
The Biggest Loser: Axon Enterprise -9.0%

Best Sector: Consumer Discretionary +1.1%
Worst Sector: Communication Services -0.3%

The House Always Wins?

Venture Capital firms have invested $2 billion in gambling businesses since the Supreme Court paved the way for states to legalize sports betting in 2018, my Barron's colleague Nick Devor writes.

Now, some of those firms are betting on treatments for problem gambling. Nick reports:

Alumni Ventures got in early on the sports betting trend. In 2017, the New Hampshire–based venture-capital firm was part of an initial round of investment that raised $2 million for Sleeper, a fantasy sports and betting app. Four years later, Sleeper was valued at $400 million. This past August, Alumni made a new bet—this time on gambling addiction treatment, investing $1.5 million in Kindbridge Behavioral Health.
Alumni isn’t the only one getting in on the pair trade. Bettor Capital, a VC firm devoted entirely to gambling, invested in Kindbridge in March. In all, Barron’s identified six VC firms simultaneously invested in gambling and gambling treatment. Most didn’t respond to requests for comment.
The investment thesis is straightforward: As more people gamble, more will eventually develop a gambling problem and seek help. Venture-capital firms see the market for treatment growing in lockstep with the market for gambling.

Nick cites a Siena College survey showing that half of American men under 50 have an account with a digital sportsbook, while The Lancet medical journal predicts 8.9% of adult sports bettors could have a gambling disorder.

Tracy Barba, director of the Lucas Institute for Venture Ethics at Santa Clara University, says the paired investments are a clear “conflict of interest” without historical precedent.
“Nobody’s telling them they can’t do this,” Barba says. “When there’s no regulation, no rules, and there’s no consequences or accountability, the only thing that is going to be driving their decision-making is internal revenue return.”
Boston-based Will Ventures has a stake in both Birches Health, a telehealth gambling treatment firm with an “empathetic online care model,” and a stake in BetHog, a crypto casino and sportsbook that calls itself “nakedly degen,” short for degenerate.

Nick has previously reported on state grants for gambling addiction treatment being mired in red tape. As a result, some advocates for problem gambling services say they can use all the help they can get.

“On balance, it’s probably a good thing,” says Keith Whyte, who spent 26 years as executive director of the National Council on Problem Gambling.
“I hope that there is a lot more investment in responsible gambling. I’m not as concerned about the reasons why,” Whyte says. “The market’s ripe. There’s an opportunity to do well by doing good.”

You can read more of Nick's reporting here.

The Calendar

The Treasury Department releases the U.S. budget statement for June tomorrow. Through the first eight months of fiscal 2025, which began last October, the U.S. had a budget deficit of $1.4 trillion, compared with a deficit of $1.2 trillion over the same period in fiscal 2024.

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