US Stock Markets Hit Record Highs as AI Shares Power Ahead
The S&P 500 and Dow Jones reach fresh milestones as artificial intelligence optimism offsets energy weakness and investors turn their focus to interest rate expectations.
US stock markets closed at record levels on Tuesday, with technology stocks once again leading the charge. Strong gains in artificial intelligence-related shares helped outweigh a pullback in energy stocks, while investors also began positioning ahead of key US economic data and comments from the Federal Reserve.
Record closes across major US indices
Wall Street ended the session firmly in positive territory:
- The S&P 500 rose 0.6% to a record close
- The Nasdaq 100 gained 0.7%, supported by strength in large-cap tech
- The Dow Jones Industrial Average climbed 1%, closing above 49,000 for the first time
The rally reflects continued confidence that artificial intelligence spending will remain a powerful driver of corporate earnings in 2026.
AI stocks surge after CES announcements
Technology shares received a further boost following developments at the CES technology conference in Las Vegas.
Key highlights included:
- Nvidia confirming that its next-generation Vera Rubin AI platform is now in full production
- Chief executive Jensen Huang also unveiling Alpamayo, an open-source AI model aimed at accelerating autonomous vehicle development
- Analysts describing demand for Nvidia’s AI hardware as “skyrocketing”
The enthusiasm spilled over into memory and storage stocks, which saw sharp gains as investors bet on rising demand driven by increasingly powerful AI chips:
- Micron Technology rose 10%
- SanDisk surged 23%
- Western Digital gained nearly 17%
These moves extended an already strong run for semiconductor-related shares.
Energy stocks pause after recent rally
Energy shares lagged the broader market, giving back some of the gains made a day earlier. The sector had rallied following political developments in Venezuela, but profit-taking set in as attention shifted back to technology and interest rate expectations.
Federal Reserve comments come into focus
Investors are also closely watching comments from US central bank officials ahead of the Federal Reserve’s late-January policy meeting.
- Federal Reserve Governor Stephen Miran said interest rates may need to be cut by more than one percentage point during 2026
- He argued that current monetary policy remains restrictive and is weighing on economic growth
The remarks come ahead of Friday’s US December jobs report, which is expected to show continued cooling in the labour market. Economists believe the data could play a key role in shaping expectations for future rate cuts.
What this could mean for investors
For investors, the market’s reaction highlights the continued dominance of AI as a growth theme. Record highs suggest strong confidence in future earnings, particularly in technology and semiconductor stocks.
However, stretched valuations and uncertainty around interest rate policy mean markets could remain sensitive to economic data and central bank signals. While AI-related shares may continue to outperform, investors may want to balance exposure with more defensive or diversified positions as volatility risks increase later in the year.
Overall, momentum remains firmly with equities, but selectivity is likely to become increasingly important.
Sources: (Investing.com, Reuters.com)
