The S&P 500 and Nasdaq closed at record highs on Tuesday, buoyed by Nvidia’s continued surge to new peaks, while the Dow ended barely higher in subdued pre-holiday trading following softer-than-expected US retail sales data.
Nvidia overtook Microsoft to become the world’s most valuable company, ending the day with a market capitalization of $US3.22 trillion.
Other chip stocks also extended their recent rallies, boosting the Philadelphia SE Semiconductor index to a record high.
Qualcomm, Arm Holdings and Micron advanced between 2.1% and 8.7%, with Micron hitting a record high.
“It’s really the AI story,” said Ty Draper, financial advisor at Beacon Capital Management in Franklin, Tennessee.
The Nasdaq notched a seventh record closing high in a row, as gains in many chip stocks offset losses in Alphabet, Amazon and Meta Platforms.
Retail sales rose 0.1% in May, versus the 0.3% growth forecast by economists polled by Reuters, while another report showed surprisingly strong May industrial production and manufacturing output.
Following the news, markets slightly increased bets on two Federal Reserve interest rate cuts this year, LSEG’s FedWatch showed, despite US central bankers’ most recent projections for just one easing.
US markets will be closed on Wednesday for the Juneteenth holiday.
Hopes for multiple rate cuts this year, excitement for AI-related companies and robust earnings from other tech firms have bolstered equities in recent months, with gains concentrated in a few heavily weighted stocks.