US equities closed at fresh record highs on Wednesday as gains in major technology stocks outweighed renewed concerns over inflation and the prospect of higher-for-longer interest rates from the Federal Reserve, according to a report by Bloomberg.
Mega-cap technology names led the advance in the S&P 500, with investor sentiment boosted by news that senior executives from Nvidia, Tesla and Apple joined President Donald Trump’s business delegation on a visit to China. A decline in oil prices also supported risk appetite.
The benchmark S&P 500 gained 0.6% by the close in New York, while the Nasdaq 100 advanced 1%, driven largely by strength across the technology sector.
The latest leg higher for equities comes despite lingering worries over the economic implications of the conflict in Iran. Strategists at HSBC said the market rally could continue as improving earnings momentum and relatively low investor positioning offset concerns surrounding elevated bond yields.
Morgan Stanley also struck a more optimistic tone on US equities, forecasting the S&P 500 could rise to 8,300 over the next 12 months. The bank pointed to resilient earnings growth and continued economic strength as supportive factors for the ongoing bull market.
Mike Wilson, who leads the firm’s equity strategy team, said earnings have remained robust despite geopolitical tensions, concerns over private credit markets and disruption tied to artificial intelligence.
Meanwhile, inflation data released this week reinforced expectations that the Federal Reserve may need to keep monetary policy restrictive for longer. US producer prices rose 6% year-on-year in April, exceeding economist forecasts and marking the strongest monthly increase since 2022. Core producer inflation climbed 5.2% from a year earlier, its highest level in more than three years.
Analysts said rising energy prices, particularly oil trading above $100 a barrel, are increasing cost pressures across the economy.
Clark Bellin, chief investment officer at Bellwether Wealth, said the latest producer price data underlined the inflation challenge facing the Fed, while Chris Low at FHN Financial noted that companies are experiencing sharply higher input costs even if those increases have not yet been fully passed on to consumers.
In fixed income markets, a $25bn sale of 30-year US Treasury bonds drew strong demand, with investors securing yields above 5% on the maturities for the first time since 2007.
Among corporate movers, Ford Motor rallied after Morgan Stanley highlighted the potential for its energy storage business to strike agreements with hyperscale technology firms. Honeywell International also attracted attention after its chief executive said demand for the company’s products was benefiting from geopolitical uncertainty and the rapid adoption of artificial intelligence ahead of its planned corporate split.
Elsewhere, Alibaba and Tencent both reported revenues below analyst expectations, highlighting ongoing challenges for Chinese technology companies seeking to convert AI-related spending into stronger growth.
In currency markets, the euro slipped 0.3% against the dollar, while Bitcoin fell 1.3% to trade below $80,000. West Texas Intermediate crude declined 0.8% to $101.40 a barrel.
