US stocks hit record highs on AI wave

US stock markets set fresh record highs as excitement over artificial intelligence (AI) continued to drive buying on Wall Street.

The benchmark S&P 500 closed up 0.58% on Tuesday, surpassing its previous peak set in mid-August. The Nasdaq Composite, which carries a heavier weighting of technology stocks, also touched a record high, ending the session up 0.45%.

Technology shares were among the strongest performers. All seven members of the "Magnificent Seven" group closed higher except Meta. Amazon led the way with a gain of 1.95%, followed by Microsoft and Tesla, up 0.78% and 0.51% respectively. Apple and Alphabet each rose 0.22%, while Nvidia added 0.14%. Meta, which has climbed more than 20% since launching its new Muse AI assistant last month, slipped 0.41%.

Several other technology stocks also posted notable moves, including Marvell Technology, up 5.81%, and Cisco, up 4.54%.

Momentum from technology and AI

Keith Lerner, chief investment officer and chief market strategist at Truist Advisory Services in Atlanta, Georgia, said the rally should be viewed as a "technology and AI wave".

"Every bull market has a leadership theme, and technology and AI remain the leadership theme of this market," Lerner told Al Jazeera. "Technology and communication services were the only two S&P 500 sectors to rise last month, while the other nine all fell."

Wall Street has shrugged off a series of challenges to the US economy as mega-cap companies spend billions of dollars on AI. Despite energy tightening caused by the US and Israeli war against Iran, along with a sell-off in US Treasuries driven in part by swelling public debt, the market remains on track for a fourth consecutive year of double-digit returns.

So far in 2026, the S&P 500 has gained 14%, while the Nasdaq Composite has risen 18.78%.

Lerner of Truist Advisory said the rally could continue through the end of 2026, based on historical trends and expectations of strong corporate earnings. "We don't expect the market to go straight up," Lerner said. "However, the fourth quarter of midterm election years has produced an average gain of 7% and been positive in 84% of cases since 1950."

According to Lerner, rising interest rates are the biggest risk to the upward trend. "Still, on balance, the weight of the evidence suggests this bull market has further room to run," he said.

Asian stocks fall, oil prices rise

Meanwhile, Asian stocks fell on Wednesday, with major indexes in Japan, South Korea and Hong Kong all moving lower in morning trade. As of 02:30 GMT, Tokyo's Nikkei 225 was down 0.79%, Seoul's Kospi was down 1.36% and Hong Kong's Hang Seng was down 0.71%.

Oil prices, already elevated since the war against Iran began, continued to rise on Wednesday as traders weighed the impact of fighting between forces loyal to Yemen's internationally recognised government and the Iran-backed Houthis. December Brent crude futures stood at $101.45 a barrel as of 02:30 GMT, up 0.87%.