NEW YORK (AP) — The U.S. stock market edged to new records on Tuesday, propelled by the continued ascent of companies benefiting from the artificial intelligence boom.
The S&P 500 saw a modest rise of 0.1%, fluctuating between minor gains and losses throughout the trading day. The Dow Jones Industrial Average climbed 228 points, or 0.4%, while the Nasdaq composite nudged up by less than 0.1%. All three indices achieved new all-time highs.
Hewlett Packard Enterprise was a significant market driver, with its stock surging 19.5% after reporting quarterly profits that far exceeded analysts’ forecasts. The company attributed this success to robust demand from clients developing their artificial intelligence capabilities.
Marvell Technology experienced its best trading day since its 2000 debut, leaping 32.5% after Nvidia CEO Jensen Huang hinted at a Taiwan conference that Marvell could become “the next trillion-dollar company.” Micron Technology, also riding the AI wave, was the most recent entrant into the growing club of market giants. Nvidia itself, despite a 0.7% dip, has seen its total valuation surpass $5 trillion.
Generac shares rose 5.7% following its announcement of a deal to supply backup power generators to an undisclosed “leading hyperscale data center operator.”
These “hyperscalers” are investing colossal sums in constructing massive AI data centers, which proponents view as the engine for the next major revolution in the global economy.
Alphabet, Google’s parent company and one such hyperscaler, revealed plans to raise $80 billion in cash through stock sales to fund its investments. The company projects spending up to $190 billion on equipment and other capital expenditures this year.
This projected spending surpasses the entire market capitalization of The Walt Disney Co., with Alphabet anticipating a “significant increase” in its investment outlays for the coming year.
These enormous expenditures prompt questions about whether AI can generate the requisite profits and productivity to justify such vast investments. Critics have already voiced concerns about a potential AI investment bubble, and Alphabet’s stock subsequently dropped 3.9%, acting as a significant drag on the S&P 500.
In summary, the S&P 500 advanced 9.82 points to close at 7,609.78. The Dow Jones Industrial Average climbed 228.91 points to 51,307.79, and the Nasdaq composite edged up 7.09 points to 27,093.90.
Analysts have suggested that the broader U.S. stock market might be poised for a slowdown after the S&P 500’s relentless nine-week winning streak, its longest since 2023. This rally has been primarily fueled by robust corporate earnings reports from U.S. companies and optimism surrounding a potential deal between the United States and Iran to reopen the Strait of Hormuz, which would facilitate the free flow of oil from the Persian Gulf and potentially reduce prices.
In the oil market, prices rebounded, recovering further from last week’s downturn. Brent crude, the international benchmark, rose 1.1% to settle at $96.00 per barrel, remaining significantly above its pre-war level of approximately $70.
Treasury yields remained relatively stable in the bond market.
The yield on the 10-year Treasury note edged down to 4.45% from 4.47% late Monday. It saw a brief spike after a report indicated U.S. employers posted significantly more job openings than economists anticipated at the end of April, signaling potential ongoing strength in the U.S. labor market. However, yields quickly retreated to their pre-report levels.
Elevated global yields have recently posed a threat to economic growth and have pressured prices for stocks and various other investments. They have already pushed the average long-term U.S. mortgage rate to its highest point in nine months and could potentially curb corporate borrowing for the construction of AI data centers, which have been a recent driver of U.S. economic expansion.
International stock markets saw indices rise across much of Europe and Asia.
Hong Kong’s Hang Seng index surged 2.5%, marking one of the largest global movements.
AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.
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