After wavering at the open, two of Wall Street’s three main stock indices set fresh record highs, before paring those gains slightly before the close.
Oil prices also spiked higher on Monday on a lack of progress in talks to end the US-Israel war on Iran, with fighting also raging in Lebanon.
“There is no concrete progress in Middle East negotiations… but investors appear broadly optimistic that a longer-term resolution will be reached,” said Susannah Streeter, chief investment strategist at Wealth Club.
David Morrison at Trade Nation noted that despite the oil market turmoil, “prices remained near the bottom of their recent range” and well below the US$100 a barrel seen a few weeks ago.
Even a surge in eurozone inflation in May to 3.2%, all but ensuring an interest rate hike later this month by the European Central Bank, was not enough to dent European stocks Tuesday.
Underpinning market optimism was a new batch of headlines from US artificial intelligence giants.
Google parent Alphabet announced plans to raise up to US$80 billion in stock to fund a major expansion of its AI infrastructure, with Warren Buffett’s Berkshire Hathaway committing US$10 billion.
“The development is raising concerns regarding heavy expenses for AI that are happening against the backdrop of uncertain profitability profiles,” said Jose Torres of Interactive Brokers.
He added that “strengthening confidence of a solid economy is countering those worries.”
Anthropic, maker of the Claude chatbot, said it had filed confidentially for an initial public offering that could value the AI group at nearly one trillion dollars.
The news propelled Seoul’s stock market, which has been at the forefront of the AI rally this year and ended at another all-time high, with Samsung shares up more than three percent.
“Headlines around Iran grab the steering wheel but the AI trade remains the engine for stock markets,” said Saxo Markets analyst Neil Wilson.
The outlook for US interest rates is also on the agenda, with the release of jobs data on Friday that could determine if the Federal Reserve will keep its benchmark rate stable or potentially hike borrowing costs to fight inflation.
US job openings data released on Tuesday was positive, showing open positions at a 23-month high in April, driven by corporate demand for workers.