S&P 500 closes at record high as AI enthusiasm outweighs oil and bond headwinds

The S&P 500 hit an all-time record high on Tuesday. A rally driven by AI enthusiasm overpowered headwinds from surging oil prices and the highest Treasury yields in more than two decades, as investors bet that capital pouring into AI infrastructure will earn returns.

The benchmark index touched an intraday high of 7,844.52 on Tuesday, surpassing its August 13 peak of 7,830, and closed above 7,800 for the first time. It finished 0.58 percent higher. The Nasdaq Composite, which is more heavily weighted toward tech stocks, also hit a record high, closing up 0.45 percent.

The S&P 500 has risen 14 percent so far in 2026. The Nasdaq Composite is up 18.78 percent. That puts the market on track for its fourth consecutive year of double-digit returns, a remarkable run given the macroeconomic headwinds. Technology and communication services were the only two S&P 500 sectors to rise last month while the other nine declined.

“They are betting that the money pouring into data centres will earn a good return, and so far, that belief has outweighed rising interest rates, more expensive oil and a 10-year bond yield above 5 percent,” said Lochlan Halloway, senior equity strategist at Morningstar Australia.

Magnificent Seven carry the index

The Magnificent Seven are Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla, and together they account for more than 34 percent of the S&P 500 market cap. Each of the Magnificent Seven apart from Meta closed higher. Amazon led with a 1.95 percent gain. Microsoft rose 0.78 percent and Tesla rose 0.51 percent. Apple and Alphabet both rose 0.22 percent, while Nvidia gained 0.14 percent. Meta fell 0.41 percent but has risen more than 20 percent since the launch last month of its AI assistant, Muse.

Marvell Technology rose 5.81 percent. Cisco gained 4.54 percent. Both extended the tech sector’s gains beyond the Magnificent Seven. Tech companies are investing heavily in data centers and AI infrastructure. Amazon said it expected about $200 billion in capital expenditures across its businesses in 2026, citing opportunities including AI, chips, and robotics.

“When you consider that much girth among a small handful of stocks, it’s apparent how much these stocks’ daily movements dictate the direction of the S&P 500 and the Nasdaq, both of which are in record territory again today,” said JJ Kinahan, Cboe Global Markets senior vice president of retail and alternative investments.

Oil and bonds test the rally

Brent crude futures for December delivery stood at $101.45 a barrel as of 02:30 GMT, up 0.87 percent. Oil crossed $100 a barrel in early March for the first time since 2022 as the Iran conflict disrupted energy supplies through the Strait of Hormuz, then fell below $70 before slingshotting back above $100 in early September. The 10-year Treasury yield surpassed 5.3 percent on Monday, reaching levels not seen since 2002. In mid-September, the Fed raised its benchmark rate for the first time in over three years and indicated more were to come. The Fed is slated to release September meeting minutes on Wednesday.

Bull market with caveats

“Every bull market has a dominant theme, and technology and AI remain this market’s dominant theme,” said Keith Lerner, chief investment officer and chief market strategist at Truist Advisory Services. “Still, the fourth quarter of midterm-election years has produced an average gain of 7 percent and has been positive 84 percent of the time since 1950,” he said. “Still, on balance, the weight of the evidence suggests this bull market still has more upside potential,” Lerner added. Halloway struck a more cautious note. “But the range of outcomes is wide, and the market is concentrated in a handful of companies, so the outlook for US shares, and by extension global shares, relies on the AI story continuing to deliver,” he said. Asian stock markets fell on Wednesday. The Nikkei 225 was down 0.79 percent, the Kospi down 1.36 percent, and the Hang Seng down 0.71 percent as of 02:30 GMT.