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The S&P 500 continued its upward march this week, closing at a new record of 6,587.47 on Friday. Fueled by investor optimism around artificial intelligence and growing confidence in a Federal Reserve rate cut, the index has now gained 12% year-to-date, reflecting a robust appetite for risk assets despite persistent inflation concerns.
AI Stocks Lead the Charge
Artificial intelligence remains the market’s golden child. Oracle surged 36% in its biggest single-day gain since 1992, after reporting explosive demand for its cloud infrastructure from AI startups and enterprise clients. Nvidia, Broadcom, and AMD also posted strong gains, lifting the PHLX Semiconductor Index to an all-time high.
Tesla joined the rally with a 6.04% jump, while Micron soared 7.55%, its best performance in four months. These moves underscore the market’s belief that AI is not just a trend—but a structural shift reshaping the tech landscape.
Rate Cut Expectations Intensify
Economic data released this week added fuel to the fire. Jobless claims rose to 263,000, the highest level in nearly four years, signaling a cooling labor market. Meanwhile, core inflation came in at 0.3% month-over-month, aligning with forecasts and reinforcing expectations that the Federal Reserve will cut interest rates at its upcoming policy meeting.
Traders are now pricing in a 90% probability of a 25 basis point cut, with a small chance of a more aggressive move. Lower rates could ease borrowing costs and support corporate earnings, especially in rate-sensitive sectors like tech and consumer discretionary.
Sector Breakdown
Technology: Dominated gains, led by AI and cloud infrastructure
Consumer Discretionary: Mixed performance, with retail under pressure
Energy: Flat, as oil prices declined
Healthcare: Slight dip amid cautious earnings outlooks
Market Sentiment and Outlook
Despite extended valuations, investor sentiment remains buoyant. Analysts caution that while fundamentals are strong, any surprise in inflation or geopolitical developments could trigger volatility. For now, however, the S&P 500’s trajectory reflects confidence in both innovation and monetary support.