The S&P 500 hit a new high on Tuesday as investors stepped deeper into artificial intelligence trading a day before the Federal Reserve announces its interest rate decision.
The broad market index rose by about 0.4% and exceeded the level of 6900 for the first time on a daily basis. The Nasdaq Composite advanced by 1%, while the Dow Jones Industrial Average gained 190 points, or 0.4%. The technology-driven Nasdaq and 30-stock Dow hit new all-time daily highs along with the S&P 500.
The market period was led by Nvidia, which climbed 5% to hit a new high. The AI chip darling made a series of announcements on Tuesday at its GTC conference, including a partnership with Finnish firm Nokia. Nvidia will take a $1 billion stake in Nokia, which has said it will use the proceeds from that equity investment to partially fund its AI plans. Other AI-related names, such as Broadcom, also saw gains.
Microsoft was up 2% ahead of Wednesday’s earnings release. The stock, along with Apple, topped $4 trillion in value during Tuesday’s session. On Tuesday, OpenAI announced that it had completed a recapitalization, a move that gives Microsoft a windfall as it holds roughly 27% of OpenAI Group’s nonprofit subsidiary PBC.
Along with Microsoft and Apple, several names from the “Magnificent Seven” will report this week, such as Alphabet, Amazon and Meta Platforms, and those five names together make up about a quarter of the total value of the S&P 500. So far, the earnings season is off to a “fantastic” start, Horizon Investments’ Mike Dickson told CNBC, SEEbiz reports. About a third of S&P 500 firms reported, with 83% beating earnings expectations, according to FactSet data.
“Obviously, valuations were quite elevated relative to historical standards, and we’ve probably gotten all the help we’re going to get from the Fed without doing anything bad [pođe] wrong,” said the firm’s head of research and quantitative strategies. “This has to be driven by earnings, and frankly, to begin with, we absolutely saw that,” he continued, noting that “we have to see what these giants have to say.”
The Fed is expected to cut its benchmark interest rate for the second time this year on Wednesday. Investors are also hoping for a signal from Fed Chairman Jerome Powell that the central bank will cut again at its last meeting of the year in December.
Investors welcomed a cooling of tensions between the US and China during the session on Monday ahead of the highly anticipated meeting between President Donald Trump and Chinese President Xi Jinping on Thursday. Trump said Monday that the two nations are expected to “pull out” a trade deal, which could address China’s restrictions on rare earth minerals, soybean purchases and TikTok.
