Markets rebound as AI sprint lifts equity indices
Wall Street edged higher on Wednesday, with the S&P 500 nudging toward a fresh all-time high as investors brushed off uncertainty from the government shutdown and focused on the potent mix of artificial intelligence optimism and evolving monetary expectations. The blue-chip index was up about 0.4%, signaling a resume of gains after a brief pause in a seven-day winning streak. The Dow Jones Industrial Average added roughly 79 points, and the Nasdaq composite was leading with a 0.7% rise as technology shares continued their rebound.
Trading volumes have been relatively light lately, a consequence of the shutdown clock and a slower release calendar for key economic data. Yet traders are leaning into the narrative that has driven markets higher since spring: expectations that the Federal Reserve will continue trimming rates, supporting equities even as inflation remains a watchful eye for policymakers.
AI stocks surge as investors chase growth and profits
A wave of enthusiasm for artificial intelligence propelled several names higher. Smaller AI-adjacent players like Poet Technologies surged 9.6%, continuing a dramatic move from the previous session after announcing a $75 million funding round to accelerate growth in AI-driven optical engines and related products. Dell Technologies joined the AI rally with a sizable 7.7% gain, citing expansion opportunities tied to AI, while Advanced Micro Devices rose 4.4% following an AI-related deal.
Wider AI names have been marching higher for weeks. Nvidia remains a standout, up near the year-to-date peaks, while Oracle and Palantir have posted substantial double- and triple-digit gains that have underscored investor appetite for AI-enabled profitability. The rally has sparked debate about whether valuations are stretched, echoing concerns that accompanied the dot-com era when a tech surge later gave way to a sharp correction.
Gold hits fresh records as inflation concerns persist
Beyond equities, gold continued its remarkable run, pushing further above $4,000 per ounce. The metal’s resilience has attracted investors seeking hedges against inflation and geopolitical risk as debt levels for major economies remain high. With inflation still above targets in many regions, gold is widely viewed as a store of value during times of uncertainty, even as some warn that rapid edge gains could invite volatility.
Fed minutes, rate cuts, and the global backdrop
Market participants are also watching for the Federal Reserve minutes from the latest meeting, where officials signaled that further rate reductions may be on the horizon. The stance aims to support a cooling jobs market while trying to keep inflation in check, a delicate balance that can influence both bonds and stocks. As expectations for ongoing rate cuts build, equity markets have found a receptive environment, although investors remain sensitive to incoming data on inflation and growth.
International markets mirrored the U.S. rally, with European indices advancing as Asia closed modestly softer. In the bond market, the 10-year Treasury yield eased to around 4.11% from 4.14% late Tuesday, reflecting a shift in demand for safer assets amid shifting rate expectations.
Risks and lookout
While the AI-driven upswing underpins optimism, analysts caution against relying on a single drivers’ narrative. The valuation debate persists, and a meaningful shift in inflation readings or a hiccup in AI profitability could temper momentum. Still, the current environment suggests investors are prioritizing growth potential and policy supports as the market navigates political and macroeconomic uncertainties.
Overall, Wall Street remains focused on two powerful tailwinds: the ongoing AI revolution fueling earnings expectations and a Federal Reserve path toward lower interest rates. If these themes hold, the market could extend its current trajectory, even as investors remain vigilant for fresh data and any developments from the broader global economy.
