AI Hype Drives Tech Giants to Record Highs as Fed Cut Bets and China Talks Lift Sentiment – US Market Wrap

A rally in the world’s largest technology companies sent stocks to all-time highs on speculation that artificial intelligence will continue to drive earnings for the group that has propelled the bull market.

While most S&P 500 stocks slowed after a wild ride, tech megacaps continued to rise. Microsoft has signed a new agreement with OpenAI that will give the software giant a 27% ownership stake worth approximately $135 billion. Apple briefly reached $4 trillion, while Nvidia CEO Huang dismissed concerns about an AI bubble.

On Wednesday and Thursday, five major technology companies, accounting for roughly a quarter of the US equity benchmark, are scheduled to report earnings. Investors will want assurances that the billions of dollars spent on computing infrastructure will continue and eventually pay off.

Bets that the Federal Reserve will cut interest rates on Wednesday boosted sentiment, with traders hoping for clarity on when officials will stop shrinking the central bank’s securities portfolio. Bets have grown that quantitative tightening will end as early as this month.

All of this is taking place ahead of President Donald Trump’s meeting with his Chinese counterpart, Xi Jinping, on Thursday. According to the Wall Street Journal, if Beijing limits the export of fentanyl-producing chemicals, the US will reduce some tariffs.

The S&P 500 closed just shy of 6,900. A gauge of the Magnificent Seven megacaps rose 1.3%. The yield on 10-year Treasuries remained stable at 3.97%. The dollar fell.