US Stocks Hit Records Amid Strong Profit Expectations

US stock markets hit new record highs on Tuesday, with the S&P 500 climbing 0.6% to surpass its previous all-time high set in August. The index has surged 23% since its low point in late March, despite ongoing concerns about global conflicts, high inflation, and rising bond yields. The Dow Jones Industrial Average gained 0.5%, while the Nasdaq composite added 0.4% to its own record set the day before.

The market's resilience is largely attributed to strong corporate profits. Analysts expect S&P 500 companies to deliver nearly 30% growth in earnings per share from a year earlier, marking the third consecutive quarter of over 25% growth. This robust profit outlook is helping stocks maintain their high levels despite the headwinds from rising bond yields, according to strategists at Barclays.

Some sectors are benefiting from specific trends. Artificial intelligence stocks, such as Nvidia, have surged, with Nvidia up 28.3% this year. Constellation Energy jumped 12.2% after announcing a long-term deal to supply Google with electricity, driven by the growing demand from AI data centers. Option Care Health soared 32.6% following news of its acquisition by CD&R and McKesson for approximately $5.8 billion.

Bond yields provided some relief on Tuesday, with the 10-year Treasury yield easing to 5.28% from 5.31%. Oil prices also steadied, with Brent crude settling at $100.58 per barrel, down from recent highs. European indexes ticked higher as bond market volatility continued amid concerns about government debts and tight budgets.