The S&P 500 and Nasdaq Composite climbed to fresh record highs as strong momentum in artificial intelligence and semiconductor stocks continued to drive Wall Street higher.
The benchmark S&P 500 gained 0.61% to close at another all time high, while the Nasdaq Composite surged 1.19% and also finished at a record level. Meanwhile, the Dow Jones Industrial Average underperformed, falling 118 points or 0.23% as investors rotated heavily into technology shares.
US stock futures were mostly unchanged during Tuesday night trading following the rally. S&P 500 futures edged slightly higher, Dow futures added just 16 points, and Nasdaq 100 futures hovered near flat levels as markets digested earnings updates and geopolitical developments.
The latest rally was fueled by a sharp surge in semiconductor giant Micron Technology, which jumped 19% and pushed its market capitalization above $1 trillion for the first time. Investor enthusiasm surrounding artificial intelligence infrastructure, data centers, and memory chip demand continued to strengthen confidence across the broader tech sector.
Technology stocks have become the dominant force behind Wall Street’s gains in 2026, with investors aggressively buying companies linked to AI expansion and cloud computing growth. Strong earnings performance across the sector has also reinforced bullish sentiment despite elevated valuations.
However, not all companies participated in the rally. Cybersecurity firm Zscaler plunged 19% in extended trading after issuing weaker than expected revenue guidance for the current quarter. Diabetes device maker Insulet also fell 8% after announcing a voluntary correction involving specific lots of its insulin management pods.
Beyond earnings, investor sentiment was also supported by improving geopolitical expectations. US President Donald Trump said negotiations with Iran aimed at ending the Middle East conflict were “proceeding nicely,” helping reduce market fears of broader regional escalation.
Although the US military carried out defensive strikes in southern Iran earlier Tuesday, officials said restraint was maintained during the ongoing ceasefire period. Optimism surrounding diplomatic progress helped support risk appetite and encouraged continued inflows into equities.
Despite the strong momentum, some strategists believe upside potential for US equities may become more limited from current levels.
Drew Pettit, US equity strategist at Citi, warned that higher Treasury yields and persistent inflation expectations could pressure stock valuations in the coming months. The US 10 year Treasury yield remains near 4.50%, a level that could challenge further expansion in equity multiples.
Pettit maintained a year end target of 7,700 for the S&P 500, implying only modest gains from current prices.
For investors, the current market environment remains highly dependent on AI related earnings growth, interest rate expectations, inflation trends, and geopolitical stability. While momentum remains bullish, elevated valuations and rising bond yields could increase volatility if economic conditions weaken or global tensions intensify again.
