The S&P 500 marked another intraday high during another strong day for U.S. equities, with investors spreading fresh optimism about technology stocks, AI and the outlook for corporate profits. On 6 October, the benchmark added around 0.6% to trade above 7 820 cracking its earlier intraday high of 7,816.7 (achieved during trading on 13 August).
The newly appointed milestone maintains a bullish trend among American stocks. The S&P 500 already rose 0.7 percent on Monday, closing at 7,773.95 and just shy of its previous record. The Nasdaq Composite also established an all-time high market close on Monday indicative of the ongoing vigor of technology-based equities.
Artificial intelligence is still one of the main driving factors for the rally. Investors continue to pour funds into businesses that will probably benefit from the growing AI infrastructure and demand of high performance computing. Semiconductor stocks have been extremely bullish as companies like Nvidia, Broadcom, and other chip companies helped strengthen the broader technology market. Nvidia stocks have been one of the main market attention as the company’s market value is reaching close to 6-trillion-dollar level.
There are several factors that make the market strength surprising, not to mention significant, as the new highs have come plus soaring bond yields and inflation worries. The 10-year Treasury yield recently advanced to multi-decade highs, and the 30-year yield also moved to a multi-year high. Typically, rising yields pressure stocks, driving investors to consider the safety of bonds and the increased expense of borrowing for companies, but investors have so far shrugged those concerns off.
A further positive for sentiment was the fall in oil prices. Brent was about 2% lower on Tuesday at around $98 a barrel (after recently trading close to $110). Lower energy prices could ease fears of further monetary tightening and keep inflation under wraps.
The Federal Reserve’s stance is shaping the markets as well. A weaker-than forecasted U.S. payrolls figure has lowered expectations of an immediate hike in interest rates. Expectations of a very high likelihood of no hike this month have been priced in by traders, though there is still some uncertainty on the policy path later in the year.
The biggest test of the rally will be corporate earnings. Investors face the third-quarter earnings season with high hopes for firms related to artificial intelligence and technology. Per Goldman Sachs, consensus expectations are for about 27% growth in S& P 500 earnings, more than half of which is seen coming from firms that will benefit from AI infrastructure spending.
At the same time, the Nasdaq is also playing into the good mood, as the tech-heavy index targets another all-time high after reaching one earlier on. Leading technology firms and chip makers continue to dominate the focus of investors, boosting the argument that artificial intelligence-related growth remains one of the most crucial themes in the stock market.
High valuations, higher Treasury yields, fluctuations in energy prices and uncertainty about the monetary policy stance might cause bouts of heightened volatility. Investors will also be monitoring whether booming earnings can support the lofty valuations of the big-cap technology stocks.
