US Stocks Hit New Records Driven by AI Rally; Fed Decision and Big Tech Earnings on Deck

US benchmark stock indices surged to new record highs on Tuesday, with the Dow Jones, S&P 500, and Nasdaq all climbing. The rally was significantly driven by the ongoing Artificial Intelligence (AI) boom. Nvidia emerged as a key performer, its stock rising 5%, bringing its market capitalization close to $5 trillion. CEO Jensen Huang announced Nvidia's $1 billion stake in Nokia and partnerships for supercomputers, highlighting strong demand for its GPUs. Apple also crossed the $4 trillion market cap milestone, boosted by strong iPhone 17 sales.

However, the market's optimism faces immediate tests. The US Federal Reserve is set to announce its interest rate decision, with a 25 basis points cut widely expected, though market participants will scrutinize the forward guidance. Furthermore, several major technology companies, including Microsoft, Alphabet, and Meta, are due to report their earnings after the market closes on Wednesday. A CNBC survey indicates that a significant majority of economists and strategists believe AI-linked stocks are overvalued, raising concerns about a potential bubble, alongside persistent inflation and Fed independence worries.

Impact This news directly impacts the US stock market by setting new benchmarks and influencing investor sentiment. It also has ripple effects on global markets due to the interconnectedness of major economies and the dominance of US tech companies. Indian investors may see indirect impacts through global fund flows, commodity prices, and the performance of their own technology and export-oriented sectors. The upcoming Fed decision and tech earnings will be closely watched globally for clues on economic direction and corporate health. Rating: 8/10

Difficult terms: Benchmark indices: Major stock market indexes like the Dow Jones, S&P 500, and Nasdaq that are used to measure the overall market's performance. Market capitalization: The total value of a company's outstanding shares of stock. GTC conference: NVIDIA's annual developer conference, showcasing new technologies and products. GPUs (Graphics Processing Units): Specialized electronic circuits designed to rapidly manipulate and alter memory to accelerate the creation of images. Magnificent Seven: A group of the seven largest technology companies in the United States (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla). Basis points: A unit of measure used in finance to describe small changes in interest rates or other percentages; 1 basis point is equal to 0.01% (1/100th of a percent).