S&P 500 and Nasdaq close at new record highs led by chip stocks

The S&P 500 and Nasdaq Composite posted gains on Wednesday, supported by a rally in AI-related technology shares, helping markets look past stronger-than-expected inflation data and rising expectations that the Federal Reserve will maintain tight monetary policy for a longer period.

The semiconductor sector rebounded after Tuesday’s decline, pushing both indexes to fresh record closing highs. Six of the so-called “Magnificent Seven” AI-linked companies also advanced between 1.4% and 3.9%.

Ryan Detrick, chief market strategist at Carson Group, said that “technology showed clear resilience despite persistently elevated inflation data,” noting that chip stocks regained strength following temporary weakness in the previous session.

Data from the US Labor Department showed producer prices rose 1.4% last month, marking the largest increase in four years, driven by disruptions in oil supplies following the closure of the Strait of Hormuz. The figures suggested that rising energy costs are beginning to spread into broader areas of the economy, reinforcing concerns over widening inflation pressures.

In light of the data, hopes for near-term Federal Reserve rate cuts faded further. Boston Fed President Susan Collins even said that additional rate hikes could be considered if inflationary pressures persist.

On the monetary policy front, the US Senate confirmed Kevin Warsh as the new Federal Reserve chairman in a party-line vote.

Jim Baird, chief investment officer at Plante Moran Financial Advisors, said the producer price report “strengthens the inflation risk narrative and supports the case for keeping interest rates elevated for longer.”

Trump, Musk, Huang, and Xi in Beijing

US President Donald Trump arrived in Beijing accompanied by Nvidia CEO Jensen Huang and billionaire Elon Musk ahead of a two-day summit with Chinese President Xi Jinping.

Shares of Nvidia and Tesla rose 2.3% and 2.7% respectively, amid expectations that the talks could pave the way for new trade agreements and easing tensions.

The summit comes at a time of heightened US-China tensions tied to Taiwan and semiconductor restrictions, while Trump seeks to strengthen his political standing amid the impact of the Iran war and rising energy prices.

The Dow Jones Industrial Average closed lower, while the S&P 500 and Nasdaq advanced, with communication services and technology leading gains across the market.

Morgan Stanley also raised its target for the S&P 500 to 8,000 points, citing continued strength in corporate earnings.

Several individual stocks saw strong moves, with Ford shares surging 13.2% and Nebius climbing 15.7%, while crypto-related stocks Coinbase and Strategy declined due to weakness in Bitcoin and Ethereum.

Overall, advancing stocks outpaced decliners in a session marked by broad divergence within the market despite the major indexes closing at record highs.