US Stocks Hit Records as AI Chips Surge and Memory Chips Plunge
US stocks reached new highs on Tuesday, with the S&P 500 and Nasdaq Composite both setting record closes. The S&P 500 surpassed 7,800 for the first time, while the Nasdaq Composite closed at 27,599.79. The Dow Jones Industrial Average also rose, gaining 253.38 points to 51,521.28. Mega-cap tech stocks led the charge, with Amazon up 1.95%, Microsoft up 0.78%, and Nvidia hitting an all-time intraday high with a market cap of $5.83 trillion.
However, the memory chip sector faced a sharp decline, with SK Hynix and Western Digital each dropping over 6%. This contrasted with strong gains in AI-related chip stocks, including Broadcom, AMD, and Marvell Technology. AMD CEO Lisa Su noted plans to boost chip supply in 2027 to meet rising AI demand. Meanwhile, oil and gold prices rebounded late in the session, with Brent crude climbing back above $101 a barrel amid escalating Middle East tensions.
The cryptocurrency market saw declines, with Bitcoin falling to around $85,500 and Ethereum dropping 0.73%. Chinese ADRs rebounded for a second day, with the Nasdaq Golden Dragon China Index up 0.31%. Market expectations for a Federal Reserve rate hike this month fell to 19.4%, down from 50.9% a week earlier. Investor Michael Burry warned about the AI trade, suggesting the market is in denial and citing past market cycles.
European equities also closed higher, with the UK's FTSE 100, France's CAC 40, Germany's DAX 30, and Italy's FTSE Italia MIB all posting gains. The session highlighted a market pattern of broad index strength with internal divergence, particularly between AI compute supply chain gains and memory chip corrections.