- The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all surged to new all-time intraday highs on Tuesday.
- Investor enthusiasm for Artificial Intelligence (AI) is a primary driver of the rally, with major tech companies posting significant gains.
- The market is closely watching the Federal Reserve, which is expected to announce its second interest rate cut of the year this week.
- Positive developments in U.S.-China trade relations are also bolstering investor confidence and contributing to the market’s upward momentum.
Market Hits Unprecedented Highs Ahead of Fed Decision
The stock market continued its record-setting run on Tuesday, with the Dow Jones Industrial Average gaining 329 points, or 0.7%, to reach a new all-time intraday high. The rally was broad-based, as the S&P 500 also touched a new record after rising 0.4%, while the tech-heavy Nasdaq Composite advanced 0.8% to its own new peak.
This surge in investor confidence comes just a day before the Federal Reserve is set to conclude its two-day policy meeting, where the central bank is widely expected to announce another cut to its benchmark interest rate.
AI and Tech Giants Fuel the Surge
The primary engine behind Tuesday’s rally was the continued investor frenzy surrounding artificial intelligence. The so-called “Magnificent Seven” tech stocks, which account for roughly a quarter of the S&P 500’s total value, are in the spotlight as several prepare to release earnings this week, including Alphabet, Amazon, Apple, Meta Platforms, and Microsoft.
In a stunning display of market power, both Apple and Microsoft saw their market valuations cross the $4 trillion threshold during Tuesday’s trading session. This optimism persisted despite Amazon’s announcement that it would begin its largest-ever round of layoffs, a move that reflects a broader trend of job cuts across the tech industry this year.
All Eyes on the Federal Reserve
Investors are now keenly focused on the Federal Reserve’s upcoming announcement. Markets are anticipating the second rate cut of the year, and traders will be listening intently for any signals from Fed Chair Jerome Powell on Wednesday. Hopes are high that the central bank may indicate a third cut at its final meeting of the year in December, partly driven by concerns over a potentially weakening labor market.
Geopolitical Tailwinds Boost Confidence
Adding to the positive market sentiment are cooling tensions between the U.S. and China. Investors cheered the prospect of a highly-anticipated meeting between the nations’ leaders on Thursday. President Donald Trump suggested on Monday that a trade deal was likely, which could address key issues such as restrictions on rare earth minerals and tariffs. Reports that the U.S. might lower tariffs if Beijing cracks down on the export of chemicals used to produce fentanyl have further buoyed market hopes for a conclusive agreement.
As one market analyst noted, “The market is expecting is something conclusive as a result of this meeting. If we don’t get an agreement of some type that can splash the headlines, I think that’ll be a disappointment.”