The U.S. stock market reached new heights on Tuesday, defying persistent challenges like war, high inflation, and rising bond yields. The S&P 500 climbed 0.6%, surpassing its previous all-time high set in August, while the Dow Jones Industrial Average added 253 points (0.5%), and the Nasdaq composite gained 0.4%. Despite economic pessimism among Americans, the market has surged 23% since its low in late March, driven by strong corporate profits.
Companies across various sectors are reporting robust earnings, with Lamb Weston, a frozen potato products seller, exceeding expectations and raising its annual profit forecast. Analysts predict nearly 30% year-over-year earnings growth for S&P 500 companies, marking the third consecutive quarter of such growth. This earnings strength is counterbalancing the impact of high bond yields, which typically make stocks less attractive.
However, risks remain. If companies fail to meet profit expectations, stock prices could drop. Additionally, there are concerns about a potential bubble in artificial-intelligence stocks, which have surged significantly, led by Nvidia’s 28.3% gain this year. Constellation Energy also saw a 12.2% jump after securing a deal to supply electricity to Google for AI data centers.
Elsewhere, Option Care Health soared 32.6% following its acquisition by CD&R and McKesson for US$5.8 billion. Bond yields eased slightly, with the 10-year Treasury yield dropping to 5.28% from 5.31%. Oil prices stabilized, with Brent crude settling at US$100.58 per barrel. International markets saw mixed movements, with gains in Europe and Asia, while South Korea’s Kospi fell 0.9%.