S&P 500 tops 7,800 for first time as AI chip rally lifts Wall Street to record highs

The S&P 500 closed above 7,800 points for the first time in its history on Tuesday, as a rally in artificial intelligence chipmakers and a dip in US treasury yields pushed major Wall Street indexes to fresh record highs, even as some signs of instability lingered in the broader US economy.

The benchmark index rose 0.58% to end the session at its new peak. The technology-heavy Nasdaq Composite climbed 0.45%, also closing at a record, while the Dow Jones Industrial Average gained 0.49%, though it remained slightly below the record high it set in August.

The gains were driven in large part by continued investor enthusiasm for companies involved in artificial intelligence infrastructure, particularly chipmakers that supply the processors used to train and run AI systems. That enthusiasm has been a dominant theme in equity markets over the past several years, lifting valuations for a handful of large technology companies to historic levels.

A decline in US treasury yields also supported the rally, as lower yields tend to make stocks more attractive relative to bonds and reduce borrowing costs for companies. Yields have fluctuated in recent months amid shifting expectations about the path of Federal Reserve interest rate policy and ongoing questions about inflation and economic growth.

Despite the record closes, some market observers have pointed to signs of underlying instability in the US economy, including uneven consumer spending data and concerns about elevated valuations in AI-related stocks. Analysts remain divided over whether the current rally reflects sustainable growth in AI-driven earnings or speculative excess reminiscent of past market cycles.