The U.S. stock market saw the Nasdaq and S&P 500 reach new closing records, fueled by gains in technology shares and optimism around artificial intelligence. Nvidia's announcement of a new AI chip for PCs sparked a rally in software and semiconductor stocks, while the Dow Jones struggled due to weakness in most sectors. Geopolitical tensions involving Iran and comments from President Trump added uncertainty, with investors eyeing the upcoming Fed meeting and jobs data for clues on inflation and interest rates.
Tech shares led a broad market rally, pushing the Nasdaq and S&P 500 to fresh record closing highs. The Dow Jones Industrial Average inched up, constrained by declines in most sectors.
Market sentiment was influenced by mixed signals on U.S.-Iran negotiations and comments from President Donald Trump regarding Israeli military actions. Nvidia surged after announcing a new AI chip for personal computers, while some other semiconductor stocks declined. Technology and communication services were the only S&P 500 sectors to post gains, with utilities taking the biggest hit. Software stocks rebounded significantly, driven by optimism around AI integration.
Nvidia's 6.3% rise followed its partnership with Microsoft to bring AI capabilities directly to PCs, lifting Microsoft shares by 2.3%. The software services index advanced 4.3%, with notable gains from ServiceNow, IBM, and Cadence Design Systems. Economic data showed U.S. factory activity expanding for a fifth consecutive month despite tariff and geopolitical challenges.
Investors are now focusing on the upcoming jobs report ahead of the Federal Reserve's policy meeting, concerned that prolonged conflict in the Middle East could fuel inflation and disrupt the ongoing stock market rally. Market breadth was nearly balanced, with advancing issues slightly outnumbering decliners on both the NYSE and Nasdaq. Trading volume was elevated, reflecting heightened activity as traders assessed the evolving landscape of AI investments and geopolitical risks
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