Wall Street surged to new heights on Tuesday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all closing at record highs, propelled by gains in technology stocks and growing anticipation surrounding the Federal Reserve's upcoming policy decision.
The Dow Jones Industrial Average rose 0.34% to close at 47,706.37, marking its 15th record close of 2025. The S&P 500 gained 0.23%, finishing the day at 6,890.89, while the Nasdaq Composite advanced 0.80% to 23,827.49.
Tech stocks were a major driving force behind the rally, fueled by optimism that artificial intelligence will continue to boost earnings for the sector. Microsoft shares climbed 2% after reaching an agreement with OpenAI, securing a 27% stake in the ChatGPT maker. Apple's market capitalization briefly exceeded $4 trillion, reaching a record high before settling to trade flat. Nvidia's stock price also hit an all-time high after the company announced partnerships with the U.S. government, Oracle, Uber, and Eli Lilly.
Adding to the positive sentiment was anticipation of a potential trade deal between the U.S. and China, with President Trump and Chinese President Xi Jinping expected to meet to discuss trade disputes.
The Federal Reserve's two-day policy meeting began on Tuesday, and the market widely expects the central bank to announce a 0.25 percentage point rate cut on Wednesday. This would mark the second rate cut this year, bringing the federal funds rate to a range of 3.75% to 4%. The expectation of a rate cut was reinforced by a cooler-than-expected September inflation report, with the Consumer Price Index rising at a pace of 3% last month.
However, analysts remain divided on the Fed's future course of action, with some advocating for more aggressive rate cuts while others are wary of further easing. The ongoing government shutdown has also made it more difficult to interpret economic data, adding to the uncertainty.
The market is up 92% from its October 2022 low. While most sectors in the S&P 500 took a breather after a three-day run, the cohort of tech megacaps kept powering ahead.
Looking ahead, investors will be closely watching earnings reports from major technology companies this week, including Apple, Alphabet, Amazon, Microsoft, and Meta Platforms. The performance of these companies will be crucial in determining whether the market rally can be sustained.
Two companies, Solstice Advance Materials and Qnity Electronics, are set to join the S&P 500 soon, replacing CarMax and Eastman Chemical respectively.
