On Friday (June 27), the S&P 500 and Nasdaq achieved record highs, driven by growing optimism for interest rate cuts and a surge in artificial intelligence (AI) enthusiasm. The S&P 500 rose 0.5%, closing at 6,173.07, while the Nasdaq gained 105 points, reaching 20,273.46. The Dow Jones Industrial Average also saw significant gains, climbing over 400 points, or 1%.

The stock market rally was initially bolstered by hopes for interest rate cuts later this year. Several Federal Reserve officials have suggested easing monetary policy as soon as this fall. President Trump has been vocal in his push for lower interest rates, criticizing Federal Reserve Chair Jerome Powell and urging rate cuts.

However, the market experienced a brief setback when President Trump announced the termination of trade talks with Canada over a proposed digital services tax targeting American tech companies. The announcement, made on Trump's social media platform, Truth Social, briefly impacted investor sentiment. Despite this, the market quickly rebounded, aided by a tentative ceasefire in the Israel-Iran conflict and reports of potential tariff agreements between the European Union and the United States.

The resurgence of AI technology has also played a significant role in the market's performance. Chipmaker Micron reported positive earnings, and Nvidia, a key player in the AI industry, reached a new record high, regaining its status as the world's most valuable company. Analysts predict that both Nvidia and Microsoft could achieve $4 trillion market caps this summer, highlighting AI's transformative impact on the tech sector.

Lucy Chapman