Major U.S. stock indexes climbed to record territory Tuesday as enthusiasm for artificial intelligence technology overshadowed worries about Middle East diplomatic efforts, which have been complicated by recent American military actions against Iran.
Technology companies focused on semiconductors drove the market gains, with Micron Technology surging over 19% to reach a $1 trillion market capitalization for the first time. The rally came after UBS analysts boosted their price target for the stock from $535 to $1,625.
Strong corporate earnings and renewed investor confidence in AI-related investments have pushed American stock markets higher despite ongoing tensions with Iran. Market participants are now watching for initial public offerings from major private artificial intelligence companies, including SpaceX.
“For those of us that have been working that long, the tech rallies we’ve been seeing this year are reminiscent of the boom at the end of the 1990s,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
“It’s also possible that some of the lessons that were learned after the tech bubble burst over 25 years ago will prevent the same thing from happening again.”
Investors found encouragement in statements from U.S. Secretary of State Marco Rubio, who indicated that an agreement with Tehran to stop the conflict could “take a few days.” Meanwhile, Iran’s Tasnim news agency reported that Tehran is pursuing the release of $24 billion in Iranian assets frozen internationally.
“Even though we don’t have an end of the war yet, there’s a very high likelihood the situation will resolve itself in a peaceful fashion sooner rather than later,” said Adam Sarhan, chief executive of 50 Park Investments.
“But the reality is that earnings are expected to grow even with high inflation. The economy is still growing, and the market is a mirror of the economy to a large extent.”
By 2:13 p.m. EDT, the Dow Jones Industrial Average dropped 175.28 points, or 0.35%, to 50,404.42. The S&P 500 climbed 40.23 points, or 0.54%, to 7,513.70, while the Nasdaq Composite advanced 265.39 points, or 1.01%, to 26,609.36.
The S&P 500, Nasdaq, and Russell 2000 all achieved new intraday peaks Tuesday, highlighting the momentum behind the current market upswing.
Oil prices also moved higher, with Brent crude futures jumping approximately 4% Tuesday following U.S. military strikes in Iran. The action has increased uncertainty about whether negotiators can quickly reach an agreement to end the conflict and restore normal shipping through the Strait of Hormuz.
Other technology stocks also posted gains, with Qualcomm climbing 3.6% after Bloomberg News reported the company secured a chip supply agreement with TikTok owner ByteDance. Marvell Technology increased 6%, while the Philadelphia SE Semiconductor Index rose 5% to reach an all-time high.
The S&P 500 information technology sector led all categories with a 1.5% increase.
As the quarterly earnings reporting period nears completion, first-quarter profit growth is projected to reach 29% compared to the same period last year, up from the 16.1% estimate from a month earlier, according to LSEG data from Friday.
On the New York Stock Exchange, stocks moving higher outnumbered those declining by a 2.27-to-1 margin. The exchange saw 504 new highs and 82 new lows.
Nasdaq trading showed 3,040 stocks rising and 1,761 falling, with advancing issues leading decliners by a 1.73-to-1 ratio.
The S&P 500 registered 40 new 52-week highs and one new low, while the Nasdaq Composite recorded 174 new highs and 65 new lows.
