Markets Rally on AI Optimism as Nvidia Leads Tech Surge

Markets kicked off the week on a strong note, with the S&P 500, Nasdaq, and Dow all notching fresh all-time highs. The rally was powered by renewed enthusiasm in AI after Nvidia pledged to invest up to $100 billion in OpenAI’s infrastructure buildout. Broader investor sentiment remained “responsibly bullish” despite high valuations, as the backdrop of rate cuts, solid growth, and subdued inflation continues to support equities. Bonds saw muted movement ahead of key inflation data, while gold hit a record high and crypto stumbled.

Key Headlines & Market Movers

• Nvidia Supercharges AI Sentiment: Nvidia jumped nearly 4% after announcing plans to invest as much as $100 billion into OpenAI to help build 10-gigawatt AI data centers. The move revived enthusiasm for AI-related tech and helped drive the S&P 500 to its 28th record of the year. Goldman Sachs boosted its S&P 500 target to 7,200 on a 12-month view, citing continued economic strength and Fed policy support.
• Fed Officials Signal Diverging Views on Rate Path: Markets are digesting mixed Fed commentary ahead of a critical inflation print. New Governor Stephen Miran argued for aggressive cuts, while other officials like Beth Hammack and Alberto Musalem urged caution. Friday’s PCE report is expected to show a slight moderation in core inflation, potentially giving the Fed more room to ease amid signs of labor market cooling.
• Corporate Moves Add to Market Buzz: Several corporate headlines helped stoke investor optimism. Oracle rallied over 5% on executive changes and new involvement in a potential TikTok deal. Apple and Tesla also gained after bullish analyst price-target hikes. Meanwhile, Pfizer’s $4.9B deal for obesity drug startup Metsera signaled continued interest in the weight-loss drug race.
• Gold Breaks Records, Crypto Falls: Gold surged 1.7% to a record $3,748/oz as investors sought hedges amid political uncertainty and a weakening dollar. Meanwhile, cryptocurrencies sold off sharply, Bitcoin dropped 2.8% and Ether fell over 7%, reflecting investor rotation out of riskier assets.

S&P 500 Sector Performance

Looking Ahead

Focus now turns to Friday’s PCE inflation report, which could shape the Fed’s next moves. Markets are hoping for a "Goldilocks" scenario: soft enough inflation to justify more rate cuts but not weak enough to spark recession fears. With seasonal trends and macro data in flux, investors may need to tread carefully as they seek fresh drivers for this record-setting rally.

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