US STOCKS-Dow, S&P 500 scale peaks as HPE, Alphabet fuel AI momentum

The Dow and the S&P 500 scaled fresh record highs on Tuesday as strong results from Hewlett Packard Enterprise and a funding commitment from Alphabet reinforced confidence in the AI buildout. HPE surged about 26%, on track for a record one-day percentage ‌gain, after the AI server maker pulled forward its long-term financial targets by two years. Peer Super Micro Computer climbed 6%, while chipmakers gained 5%. Alphabet said it was looking to raise $80 billion in equity offerings, including an investment from Berkshire Hathaway, to fund a costly expansion of its AI infrastructure. While Alphabet's stock itself slipped nearly 2.5%, dragging down the communications services index almost 1.5%, the news fanned optimism around ‌AI infrastructure spend. "It confirms the insatiable demand that we're seeing really across the board for AI. Every day it seems like a different company comes out with incredible signs that ‌this wave of AI is alive and well," said Ryan Detrick, chief market strategist at Carson Group.

The S&P 500 and the Nasdaq logged their eighth straight session of gains on Monday and closed at record levels after Nvidia unveiled a new processor to bring AI to personal computers. Marvell Technology's shares surged more than 26% to over $240 billion in market value after Nvidia Chief Executive Officer Jensen Huang called the chipmaker the next "trillion dollar company" at the Computex conference in ⁠Taipei. Nvidia invested $2 billion ​in Marvell in March. At 11:26 a.m. ET, ⁠the Dow Jones Industrial Average rose 155.84 points, or 0.31%, to 51,234.72, the S&P 500 gained 17.47 points, or 0.23%, to 7,617.43 and the Nasdaq Composite gained 73.42 points, or 0.27%, to 27,160.23. Seven out of 11 major S&P 500 ⁠indexes were in the green, with utilities advancing the most.

The software index dropped 3.7% as a recovery rally stalled following a 14% surge in the last three sessions. ServiceNow, Salesforce and Intuit were down between 6% and ​10%. Microsoft dropped 3.7%. Microchip Technology advanced 6% after an upbeat data center revenue forecast.

Upbeat first-quarter results and AI enthusiasm have driven the rally on Wall Street, with hopes for ⁠an end to the U.S.-Iran conflict and a reopening of the Strait of Hormuz adding support. But recent flare-ups in tensions have raised concerns that a prolonged conflict could stoke inflation, push the Federal Reserve toward tighter policy and threaten Wall ⁠Street's ​record run. U.S. Secretary of State Marco Rubio told lawmakers that Iran had agreed to negotiate aspects of its nuclear program that it previously refused to discuss.

"There's a lot of uncertainty there, especially when it comes to the increase we got in oil prices yesterday because of that. We're seeing that some of the momentum trade is losing a little bit of steam," said Megan ⁠Horneman, chief investment officer at Verdence. Cleveland Federal Reserve President Beth Hammack, a voting member of the central bank's policy-setting committee, said the Fed may need to raise interest rates soon should already ⁠high inflation pressures continue to mount. Money market pricing shows ⁠traders have all but priced out rate cuts for 2026 and see growing odds of an eventual hike. Advancing issues outnumbered decliners by a 1.55-to-1 ratio on the NYSE, decliners outnumbered advancers by a 1.01-to-1 ratio on the Nasdaq. The S&P 500 posted 22 new 52-week highs and 15 ‌new lows while the Nasdaq Composite ‌recorded 96 new highs and 71 new lows.

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