Key Takeaways
The Nasdaq Composite jumped 2% as cooling oil prices and a sustained artificial intelligence boom powered a broad market rally, with the S&P 500 also hitting a new high.
Technology and semiconductor stocks led the gains, with the benchmark SOX index soaring 4.2% as names like Advanced Micro Devices and Intel posted double-digit increases.
Today's Market Snapshot:
The Nasdaq Composite surged 2% on Tuesday, closing at a new high as a potent combination of falling oil prices and continued euphoria around artificial intelligence propelled technology stocks higher. The rally was broad, with the S&P 500 also posting a new record, signaling renewed investor confidence.
"The S&P 500 and Nasdaq sailed to new highs on Tuesday, riding the crest of yet another wave of optimism around the artificial intelligence boom," said Jamie McGeever at Reuters. "Strong earnings, lower oil prices, and relief that the U.S.-Iran ceasefire is holding also lifted sentiment."
The rally's engine was the tech sector, which climbed 1.6% as all 11 sectors in the S&P 500 advanced. The benchmark semiconductor index (SOX) jumped 4.2% to a new record. Meanwhile, the CBOE Volatility Index (VIX), Wall Street's so-called fear gauge, drifted near 18, down sharply from its peak above 31 in late March, reflecting a significant drop in demand for portfolio protection.
The gains suggest investors are rotating back into growth equities as macroeconomic headwinds appear to ease. With the 10-year Treasury yield holding around 4.5% and oil prices retreating, the focus has shifted squarely to the earnings power of companies poised to benefit from the AI investment cycle.
The AI theme was on full display as chip-related stocks soared. Advanced Micro Devices (AMD) surged 16.2% on what traders cited as AI profit tailwinds. Intel (INTC) jumped 13%, bringing its gain over the last six weeks to 170%, after being named the host CPU for Nvidia's DGX Rubin platform. The rally extended to memory and storage, with Seagate Technology (STX) and Western Digital (WDC) rising after topping expectations on strong demand from hyperscale data centers.
Adding fuel to the rally was a sharp drop in energy prices. West Texas Intermediate (WTI) crude fell about 6% to trade below $100 a barrel. The slide came after reports of progress in U.S.-Iran de-escalation talks, which eased fears of potential supply disruptions and removed a significant inflation risk premium that had weighed on the market.
The decline in the VIX to the lower end of its typical range indicates that the options market is pricing in smaller daily swings for the S&P 500. While this reflects rising confidence, some analysts caution that cheap volatility could make the market vulnerable to shocks.
Several potential catalysts are on the horizon, including a Federal Open Market Committee (FOMC) meeting and key reports on non-farm payrolls and April CPI next week. Any of these could disrupt the current bullish sentiment and cause volatility to spike again. For now, however, the market appears focused on the powerful tailwinds of the AI supercycle and the welcome relief from inflationary pressures.
This article is for informational purposes only and does not constitute investment advice.
