S&P 500 Hits Record High Driven by AI and Tech Stocks

The S&P 500 hit a new all-time high on Tuesday, rising 0.7% to reach 7,830 points. This marks the index’s first intraday record high in nearly two months and could close at a record high for the first time since August 13 if it gains roughly 0.3% by the end of the day. The rally was driven by renewed enthusiasm for artificial intelligence, with tech and AI stocks leading the charge. The Nasdaq Composite also closed at a record high on Monday.

While tech stocks have surged, other sectors like real estate, financials, materials, and utilities have struggled due to higher borrowing costs. The 10-year Treasury yield hit its highest level since 2002, influencing economic activity and mortgage rates. However, stocks across sectors received a boost from a drop in oil prices and Treasury yields, which had previously pressured the market. Brent crude fell 2% to $98 per barrel, providing some relief from recent highs.

Nvidia, with a market value of nearly $6 trillion, accounts for over 8% of the S&P 500 and has contributed significantly to the index’s gains. The S&P 500 is up more than 14% this year, on track for its fourth-straight year of double-digit gains. Recent optimism was fueled by Meta’s successful launch of its Muse personal assistant app, which reignited confidence in consumer AI applications.

Despite the record highs, Wall Street remains cautious. The rally’s breadth has narrowed, with tech stocks doing the heavy lifting. Ulrike Hoffmann-Burchardi, global head of equities at UBS, noted the importance of managing risk through a diversified portfolio. While the S&P 500 and Nasdaq are at record highs, the Dow Jones Industrial Average is down roughly 5% from its August peak, reflecting its lower tech exposure.