- The three major U.S. stock indices showed divergent trends, with the S&P 500 Index (SPX:US) rising 0.84% to close at 7398.93 points, and the Nasdaq Composite Index (IXIC:US) increasing by 1.71% to 26247.08 points, both reaching record highs; the Dow Jones Industrial Average (DJI:US) edged up 0.02% to 49609.16 points.
- The AI theme continues to dominate market liquidity allocation, with Nvidia (NVDA:US) closing up 1.8%, and storage device suppliers Micron Technology (MU:US) and SanDisk (SNDK:US) recording significant gains of over 15%, driving the Philadelphia Semiconductor Index (SOX:US) to a cumulative gain of 55% in the second quarter.
- Macroeconomic data shows resilience, with U.S. job growth in April exceeding expectations and the unemployment rate remaining at 4.3%. Combined with Brent crude oil (BRN1!) surpassing $100 per barrel, the market is pricing in that the Federal Reserve (Fed) will maintain the benchmark interest rate range of 3.50% to 3.75% until the end of the year.
Core Index Trends and Capital Flows
On this trading day, the U.S. equity market exhibited a significant structural trend. The S&P 500 and Nasdaq Composite indices recorded gains for the sixth consecutive week, marking the longest streak since October 2024. From a sector rotation perspective, the S&P 500 Technology Index surged 2.7% in a single day, becoming the absolute driving force for the broader market's upward movement; meanwhile, the Utilities Index, representing defensive assets, fell by 0.9%. This typical "Risk-On" characteristic reflects that institutional funds are accelerating their concentration on tech giants with high growth certainty, while reducing allocation to traditional industries sensitive to interest rates and lacking intrinsic growth momentum. The total trading volume on U.S. exchanges was 17.2 billion shares, slightly below the 20-day average of 17.6 billion shares, indicating that at historical high levels, market chips are tightly held, with no signs of panic selling.
AI Computing Infrastructure-Driven Structural Expansion
The continuous and unexpected demand for underlying computing power is the core of this market rally. Nvidia, as the cornerstone of computing chips, laid the foundation for market sentiment with its moderate rise. More notably, the storage chip industry chain saw a significant upward revision in valuations, with Micron Technology and SanDisk gaining over 15% in a single day, confirming that AI data centers, after completing the initial GPU cluster setup, are now entering a large-scale phase of high-bandwidth memory and large-capacity SSD configuration. The Philadelphia Semiconductor Index's cumulative return of 55% in the second quarter essentially represents global capital's early pricing of the semiconductor industry chain entering a strong boom cycle. If the commercialization of AI applications proceeds as expected, the capital expenditure cycle for semiconductor equipment is likely to extend further.
Employment Data and Fed Policy Pricing
Macroeconomic data provides fundamental support for the high valuation of risk assets. The unexpected expansion of non-farm payrolls in April and the 4.3% unemployment rate indicate that the U.S. labor market has not shown signs of systemic recession after a prolonged period of monetary tightening. Analysis from Sage Advisory Services points out that productivity improvements, stable consumer spending, and the wealth effect from rising asset prices collectively build economic resilience. Based on this, derivatives market traders have readjusted their expectations for monetary policy, with current federal funds rate futures pricing indicating that the Fed may lock the benchmark interest rate in the 3.50% to 3.75% range for the remainder of 2026. This "high interest rate with high growth" macro combination temporarily alleviates market concerns about a hard economic landing.
Geopolitical Premium and Energy Market Disruptions
Despite the strong performance of tech stocks, global geopolitical risks still hold significant weight in asset pricing models. The escalation of conflicts in the Middle East and expected shipping disruptions in the Strait of Hormuz have directly pushed Brent crude oil futures prices above the psychological threshold of $100 per barrel. High energy prices not only increase input costs for manufacturing but also add variables to the future path of core inflation decline. The negative spillover effects of high oil prices have already appeared in some industries, with online travel platform Expedia (EXPE:US) seeing a 9% drop in stock price due to reduced travel demand caused by Middle East conflicts. If oil prices remain in the triple-digit range for an extended period, it could substantially pressure profit margins in the non-essential consumer goods and transportation sectors.
Earnings Season Fundamental Support Verification
Another key factor supporting the repeated record highs of the three major indices is the certainty of corporate earnings. According to data from the London Stock Exchange Group (LSEG), among the 440 S&P 500 component companies that have reported first-quarter results, as many as 83% have exceeded Wall Street analysts' expectations, significantly higher than the historical long-term average of 67%. Overall, the year-on-year earnings growth rate for S&P 500 component companies in the first quarter is expected to reach 29%, with the vast majority of this increase contributed by leading companies in the AI-related industry chain. This strong balance sheet performance makes investors more inclined to pay a higher valuation premium for intrinsic growth potential over geopolitical conflict risks.
