US stock markets reach record highs driven by AI enthusiasm

The S&P 500 and the tech-dominated Nasdaq set fresh records, with Nvidia closing past $2tn for the first time.

Record-Breaking Performance

The US stock markets closed at record highs on Friday, buoyed by investors’ continued enthusiasm for artificial intelligence (AI) technology. 

Both the S&P 500 and the Nasdaq, which is dominated by tech companies, set new records. 

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The Nasdaq surpassed its previous peak in 2021, propelled by strong gains from Meta, the parent company of Facebook, and Nvidia, a leading AI chipmaker.

Historic Milestone for Nvidia

Nvidia achieved a significant milestone by closing above $2 trillion in market value for the first time. The company’s market value has doubled in just nine months, reflecting the growing importance of AI technology in various industries. 

Rival chipmaker Advanced Micro Devices also saw its shares reach a record high, contributing to the broader rally in the Philadelphia semiconductor index, which set a new record.

AI Driving Growth Prospects

The rally in US stock markets has been largely fueled by optimism surrounding the growth prospects of companies involved in AI technology. 

Investors are betting on the transformative impact of AI across sectors, from healthcare to finance, driving demand for AI-enabled products and services.

Resilient Economy Supports Market Sentiment

Market sentiment has been bolstered by the resilience of the US economy, with indicators pointing to sustained growth. 

Investors are closely monitoring the Federal Reserve’s stance on interest rates, speculating about the timing of the first rate cut. 

Despite concerns about inflation, investors remain optimistic about the Fed’s ability to engineer a soft landing for the economy.

Gradual Approach to Rate Cuts

Sam Stovall, Chief Investment Strategist at CFRA Research in New York, believes that the Fed will take a gradual approach to lowering interest rates, given the strength of the economy and persistent inflationary pressures. 

This cautious approach is seen as positive by investors, as it signals a gradual transition away from the current high-interest rate environment without the need for aggressive rate cuts.

Closing Numbers

Preliminary data shows that the S&P 500 gained 41.16 points, or 0.81%, closing at 5,137.43 points. The Nasdaq Composite surged 183.02 points, or 1.14%, ending at 16,272.22. 

The Dow Jones Industrial Average rose 90.43 points, or 0.24%, closing at 39,088.11. These record-breaking numbers underscore the optimism and confidence in the US stock markets driven by the promise of AI technology.