Stock Market Today: Investors’ Top Fears Fade As Indexes Hit Records
Stocks are back at all-time highs, and the rally can be chalked up to the clearing of two major headwinds investors have been dealing with for weeks: AI-related earnings jitters and macro fears tied to the Iran war.
Indexes were up again on Wednesday after the S&P 500 joined the Dow in record territory on Tuesday. Renewed optimism over the AI trade after weeks of jitters ahead of mega-cap earnings helped catalyze this week’s rally.
Here’s where major indexes stood shortly after the 9:30 a.m. ET opening bell:
• Nasdaq 100: 26,692.98, up 0.41%
Some of the fresh momentum arrived late last week, as Leopold Aschenbrenner’s Situational Awareness hedge fund melted down. Citadel swooping in to buy the AI-laden stock portfolio amounted to a vote of confidence in the tech trade, sparking a rally to cap off the week.
The second major bullish development this week has been the apparent softening of US-Iran tensions and new indications that a deal is near to reopen the Strait of Hormuz. That would dispel a major economic overhang that’s weighed on the market all summer.
“A fuller opening of the Strait would help alleviate investors’ concerns around prolonged inflation increases,” said Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth.
“Waning inflation fears translate into lower interest rates as investors will not require as much term premium further out the yield and could even reduce the need for the Fed to hike interest rates this year.”
Pappalardo also told Business Insider that strong earnings from some Big Tech leaders, including Microsoft and Amazon, have reinvigorated the tech trade, demonstrating that high capex spending is starting to drive growth for hyperscalers, something that’s been a key concern for many investors.
He also pointed to Palantir‘s stellar earnings report on Monday that propelled the stock nearly 30% higher in Tuesday’s session. The “otherworldly” commercial revenue acted as another catalyst that helped drive growth for tech stocks on Tuesday.
“The stock rallies seen in the last two days suggest there is a desire from market participants to see the AI stocks continue to move higher,” Pappalardo added. “The price action following any positive news seems to outweigh the actual strength of the news reflecting what could be described as potentially overly bullish sentiment.”
Other finance pros see more reasons to regard the recent AI recovery as an indicator of more gains to come. Marcus Sturdivant Sr, a managing principal at advisory firm The ABC Squared, noted that rather than falling into a bearish feedback loop after July’s intense volatility, the market showed a clear ability to shake off severe volatility.
Ken Mahoney, CEO of Mahoney Asset Management isn’t surprised by the latest show of strength either. He added that while the Nasdaq Composite and Nasdaq 100 were battling volatile conditions, the Dow and S&P 500 were both showing strength.
“If we can continue to see a risk on move and more rotation to tech, the Nasdaq will be the next index to make new highs hopefully, and those can be very good periods for momentum and high beta stocks to really ramp back up after some of these large declines we saw there,” he told Business Insider.
