Wall Street surged to fresh record highs on Tuesday (Wednesday AEDT), driven by renewed enthusiasm for artificial intelligence stocks as investors positioned ahead of the Federal Reserve’s closely watched interest rate decision.
The Dow Jones Industrial Average rose 161.8 points, or 0.3%, to finish at 47,706.4, while the S&P 500 gained 15.7 points, or 0.2%, to 6,890.9. The Nasdaq Composite outperformed, climbing 190 points, or 0.8%, to 23,827.5, lifted by a wave of optimism surrounding AI-related names.
Leading the advance was Nvidia, which rallied 5% after unveiling a raft of announcements at its annual GTC conference. The chipmaker said it would build artificial intelligence supercomputers for the United States Department of Energy and revealed a strategic partnership with Finnish telecom group Nokia.
Nvidia will also take a $1 billion stake in Nokia, with the company planning to use proceeds from the investment to accelerate its AI ambitions.
Nvidia’s gains sparked a broader rally across semiconductor and tech hardware names, with Broadcom rising 3% and Taiwan Semiconductor Manufacturing (TSMC) up 1.1%.
Microsoft climbed 2% ahead of its quarterly earnings due after Wednesday’s market close (Thursday AEDT).
The company’s market capitalisation briefly exceeded $4 trillion, alongside Apple, marking a new milestone for the tech giants.
Meanwhile, OpenAI confirmed it had completed its recapitalisation, paving the way for Microsoft, which owns roughly 27% of the for-profit OpenAI Group PBC, to benefit from a potential windfall.
Investors are eyeing upcoming results from several other “Magnificent Seven” companies, including Alphabet, Amazon, and Meta Platforms, which collectively account for about one-quarter of the S&P 500’s total market value.
Attention now turns to the Federal Reserve, which is expected to cut interest rates for a second time this year on Wednesday. Traders are also looking for hints from Chair Jerome Powell on whether another rate cut could follow in December.
Geopolitical sentiment remained constructive after signs of easing tensions between the United States and China. President Donald Trump said on Monday that both nations were expected to “come away with” a trade deal following his meeting with Chinese President Xi Jinping on Thursday.
The deal could address issues such as China’s restrictions on rare earth exports, soybean purchases, and the future of TikTok.
In Tokyo, Trump praised Japan’s first female leader, Sanae Takaichi, after signing a new agreement aimed at strengthening cooperation on critical minerals and rare earth supplies as part of a broader push to reduce reliance on China’s dominance in key electronic components.
On the bond markets, yields edged lower, with the 10-year Treasury and 2-year Treasury each down 0.2 percentage points, to 3.978% and 3.49%, respectively.
