US Stocks Hit Record Highs on Strong Corporate Earnings

The U.S. stock market reached new highs on Tuesday, with the S&P 500 climbing 0.6% to set a record, surpassing its previous all-time high from August. Despite ongoing concerns such as war, high inflation, and rising bond yields, the S&P 500 has surged 23% since its low in late March. The Dow Jones Industrial Average gained 253 points, or 0.5%, while the Nasdaq composite added 0.4% to its own record set the day before. Investors are benefiting from these record-high stock prices, even as Americans remain pessimistic about the rising cost of living.

One of the key drivers behind this market rally is the persistent ability of companies to generate higher profits. Lamb Weston, a seller of frozen fries and potato products, reported stronger-than-expected profit and revenue for its latest quarter, prompting a 7.5% rally in its stock. CEO Mike Smith noted that the company is dealing with rising freight and other expenses but still raised its full-year profit forecast. This trend is not limited to Lamb Weston; many companies are expected to report strong earnings for the third quarter, with analysts predicting nearly 30% growth in earnings per share for the S&P 500.

The market's resilience is also supported by the artificial-intelligence sector, which has seen significant gains. Nvidia, for example, has surged 28.3% this year, roughly double the broader market's gain. Constellation Energy jumped 12.2% after announcing a long-term deal to supply Google with electricity, driven by the growing demand for AI data centers. However, some critics warn of a potential bubble in AI stocks due to their rapid rise.

Bond yields showed some easing on Tuesday, with the 10-year Treasury yield falling to 5.28% from 5.31%. Oil prices also steadied, with Brent crude settling at $100.58 per barrel. Internationally, European markets saw modest gains, while Asian markets had mixed performances, with Japan's Nikkei 225 rising 1.1% and South Korea's Kospi dropping 0.9%.