S&P 500 and Nasdaq Hit Record Highs on AI Chipmaker Rally
US stock indexes the S&P 500 and Nasdaq closed at record levels, driven by gains in AI chipmakers and a dip in Treasury yields. The S&P 500 topped 7,800 for the first time ever.
Wall Street ended Tuesday's session with fresh records, as both the S&P 500 and the Nasdaq closed at all-time highs. The advance was fuelled by a rally in shares of companies making chips for artificial intelligence, along with a pullback in US Treasury yields.
The S&P 500 gained 0.58% on the day and closed above 7,800 for the first time in its history. The technology-heavy Nasdaq rose 0.45%, while the Dow Jones Industrial Average, which remains slightly below its August peak, added 0.49%.
What lifted investors
Market participants were encouraged by recent news from chipmakers Marvell Technology, Advanced Micro Devices and Broadcom, which pointed to growing demand for the chips that power AI. Investors have also become more confident that the US Federal Reserve will leave interest rates unchanged at its October meeting. September jobs figures showed weak labor market growth, and several Fed officials have said the next rate increase can probably wait.
Signs of instability
The optimism in equities, driven largely by continued AI investment, persists despite other signs of instability in the US economy and in global politics. The US bond market, usually regarded as one of the safest places to invest, has been turbulent in recent weeks. Concerns about high inflation and interest rates pushed yields higher. The 10-year Treasury yield reached 5.349% on Monday, its highest since April 2022, before easing on Tuesday.
Higher energy costs remain a major burden for American consumers. Gasoline prices have dipped over the past week but are still around $1.20 a gallon higher on average than a year ago. Diesel, which fuels trucks, buses and trains, has fallen from its record high but remains more than 40% above last year's level.
Political backdrop
The economy is expected to be a leading issue in the coming midterm elections, with many voters frustrated by high prices. Donald Trump, who has been campaigning for Republican candidates around the country, has sought to present a different picture. At a rally in Nebraska on Monday night, he said the nation is doing better than it ever has and that gas prices would drop below $1.85 a gallon "in no time".
