Global stocks advance as S&P 500 hits record high driven by strong corporate profits

Global stock markets mostly advanced on Tuesday, following gains on Wall Street and a dip in oil prices. The S&P 500 climbed 0.6% to a new record high, surpassing its previous peak in August. Despite concerns over war, high inflation, and bond market pressures, the index has surged 23% since hitting a low in late March. The Dow Jones Industrial Average added 253 points, or 0.5%, while the Nasdaq composite gained 0.4%, building on its own all-time high from the day before.

Corporate profits remain a key driver of the market's resilience. Companies like Lamb Weston, which sells frozen fries and other potato products, reported stronger-than-expected earnings, boosting its stock by 7.5%. CEO Mike Smith noted rising freight costs but raised the company's annual profit forecast. Analysts anticipate nearly 30% year-over-year earnings growth for S&P 500 companies, which would mark the third straight quarter of over 25% growth. This strength in corporate profits is helping stocks withstand high bond yields.

AI-related stocks, including Nvidia and Constellation Energy, have been major contributors to the market's rally. Constellation Energy jumped 12.2% after announcing a deal to supply electricity to Google. Meanwhile, Option Care Health soared 32.6% following news of its acquisition by CD&R and McKesson for roughly $5.8 billion. Bond yields eased slightly, with the 10-year Treasury yield dropping to 5.28% from 5.31%. Oil prices also steadied, with Brent crude settling at $100.58 per barrel.

Internationally, European markets ticked higher amid bond market volatility and protests over school funding in France. In Asia, Japan's Nikkei 225 rose 1.1%, and Hong Kong's Hang Seng climbed 1%, while South Korea's Kospi fell 0.9%. Some critics warn of a potential bubble in AI stocks, citing their rapid gains and the market's reliance on meeting high earnings expectations.