Nasdaq 100 Eyes First Record Since June as AI Euphoria Resumes
(Bloomberg) -- A relentless tech-stock rally pushed the Nasdaq 100 Index toward its first record since June on Tuesday, extending gains fueled by bets on artificial intelligence tools from the likes of Meta Platforms Inc.
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The tech-heavy gauge advanced as much as 0.7% to 30,699, a level that exceededd its record close in June, before paring the gains. Shopify Inc. was the top-performing stock in the Nasdaq 100, climbing 7.0% after inking a partnership with Meta for its Muse AI product.
Trades rushed back into technology and growth stocks seen as the biggest beneficiaries from AI amid renewed hopes for diplomatic efforts to revive energy flows through the Strait of Hormuz. The S&P 500 Index traded little changed and is hovering 0.5% away from its record in August, while the Dow Jones Industrial Average slipped 0.4%.
"What a rally," said Brad Conger, chief investment officer at Hirtle & Co. "For the past month or so I've felt like the market was incredibly strong even though it wasn't moving anywhere because it was coping with oil going up."
In the current market, investors are "more than willing to chase rallies when they occur," said Steve Sosnick, chief strategist at Interactive Brokers LLC. He added that investors have been unwilling to jump out of the tech sector. "During the modest selling occurred last week, it felt as though investors were only willing to lighten up, not truly liquidate their positions or take risk out of their portfolios."
Strategists see more bullishness in the AI trade even as a rally in chipmakers in Europe and Asia stalled overnight. Separately, Alibaba Group Holding Ltd. unveiled what it called China's most powerful AI chip, potentially enhancing competition with the US sector.
"The strong reception for Muse reignited enthusiasm across the AI hardware ecosystem," said Christopher Murphy, co-head of derivatives strategy at Susquehanna. He added that options flows signal "upside chasing" in the tech trade.
Energy stocks were broadly down as oil continued to slide after overnight headlines in Japan revealed that Iranian officials had proposed re-opening the Strait of Hormuz in seven days. Saudi Arabia also expects to resume operations on its 7-million-barrels-a-day East-West pipeline this week.
Recent gains in oil prices have also pushed up inflation expectations and yields, which have hampered equity performance. "We believe the stock market's gains for the year are in, and have reduced our S&P 500 target to 7,800 due to rising rates, which are a drag on stocks," said Emily Bowersock Hill, CEO of Bowersock Capital Partners.
All eyes are on US President Donald Trump's speech at the United Nations General Assembly in New York. Trump called on the world to help the White House isolate Iran's economy in a campaign designed to pressure Tehran into ending the war.
In economic news, US private payrolls rose an average of 20,000 per week in the four week period to Sept. 5. General regional business activity slipped, according to a report from the Philadelphia Fed.
Watch chipmakers after a rally in Europe and Asia stalled, with optimism over Meta Platforms Inc.'s personal agent giving way to caution in a sign that investors remain reluctant to chase gains after recent volatility.
Energy stocks are down 0.2%, given the decline in oil prices.
Watch shares Quest Diagnostics and Labcorp Holdings after the Centers for Medicare & Medicaid Services (CMS) released new preliminary medicare payment rates for lab services.
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