US stocks on Tuesday jumped to record highs yet again — powered by a strong round of earnings, huge AI deals, an expected upcoming interest rate cut and optimism about President Trump’s meeting later this week with his Chinese counterpart.
The Dow Jones Industrial Average rose 161 points, or 0.3% to 47,706.37, while the tech-heavy Nasdaq climbed 0.8%. At its high, the Dow jumped 0.8%.
The S&P 500 ticked up 0.2% after hitting a fresh all-time intraday high earlier in the session. All three indexes set an all-time high for the third straight day.
“While the market’s past few days of gains might be perplexing to some investors, there is justification for this latest melt up in stocks,” Paul Stanley, chief investment officer at Granite Bay Wealth Management, said in a note Tuesday.
“The stock market is getting everything it wants, from a Federal Reserve rate cut to a thawing of U.S-China trade tensions to continued strength in earnings.”
Tuesday’s stock rally also pushed Apple and Microsoft past market caps of $4 trillion.
The iPhone maker is only the third stock in history to cross that mark. Microsoft previously hit $4 trillion in July.
Microsoft on Tuesday reached a deal with its longtime partner OpenAI that allows the artificial intelligence company to be traded publicly and expand. It was the latest deal in a year that has seen billions of dollars poured into AI companies.
Apple and Microsoft are still trailing Nvidia. The Santa Clara, Calif.-based chipmaker remains the world’s most valuable company, with a market capitalization of $4.6 trillion.
Nvidia said Tuesday it was investing $1 billion in Nokia, the Finnish company long known for cell phones that has mostly turned into a supplier of 5G cellular equipment to telecom businesses, CNBC noted. Under the new deal, Nvidia will explore using Nokia’s data center tech for future construction of AI infrastructure.
About one third of S&P 500 companies have reported their earnings so far this quarter – and 83% of those firms have surpassed Wall Street estimates, according to FactSet.
Shares in United Parcel Service and Wayfair rose 8% and 23%, respectively, after both firms reported revenues and earnings that beat expectations. UPS’ uptick came after it reported firing 48,000 workers since last year.
PayPal shares gained 3.9% after the company reported strong earnings and announced a new deal with OpenAI to have its digital wallet embedded in ChatGPT. The partnership will allow users to buy items through the uber-popular AI chatbot.
A good chunk of the “Magnificent Seven” tech firms – which include Alphabet, Amazon, Apple, Meta and Microsoft – are slated to report earnings this week. These seven stocks make up about one quarter of the S&P 500’s overall value.
Further adding to investor optimism, the Federal Reserve is widely expected to cut interest rates by a quarter point after its two-day meeting ends on Wednesday. Traders bet over 95% odds on a quarter-point cut to the 3.75% to 4% range, according to CME FedWatch.
On the trade front, investors are hopeful that Trump will clinch a deal with China this week. He’s set to meet Chinese President Xi Jinping on Thursday in South Korea.
US stocks closed at all-time highs Monday after Trump said he will “come away with the deal.”
Over the weekend, Treasury Secretary Scott Bessent said the deal would likely lead Trump to nix his threatened 100% tariff on China and delay Beijing’s strict export controls on rare earths, which are key to energy infrastructure, defense technologies and manufacturing.
