U.S. equities climbed to fresh highs on Tuesday, propelled by renewed enthusiasm around artificial intelligence and a string of robust corporate reports. Lower oil prices and signs that a U.S.-Iran ceasefire was holding added to investor confidence, pushing major indexes higher in a broadly positive session.
Market participants are also being asked to weigh a cycle that some see as self-reinforcing: expectations for outsized earnings and returns have been driving prices upward - a pattern that could, if reversed, generate turbulence in the months ahead. That dynamic is receiving attention amid the latest market moves.
If you have time for further reading, here are a few items recommended to help contextualize today’s moves:
- US says Iran ceasefire holds despite exchange of fire over Strait of Hormuz
- Trump broke OPEC. He may regret it: Bousso
- EXCLUSIVE-US prepared for visa sanctions on China over migrants issue, official says
- Banks buying sovereign debt is lesser of two evils
- Australia’s central bank set to cool its heels after rapid-fire rate hikes
Summary of today’s market moves
- STOCKS: The MSCI All Country index, the S&P 500 and the Nasdaq all reached new highs. Taiwan also logged a record. MSCI Asia ex-Japan eased back from Monday’s record. European shares were broadly higher, though the FTSE 100 fell 1.4%.
- SECTORS/SHARES: All 11 S&P 500 sectors rose. Technology gained 1.6% and materials 1.7%. The benchmark semiconductor index (SOX) jumped 4.2% to a new record, and has risen roughly 55% over the last six weeks. Intel surged 13% on the day and is up about 170% over the same six-week span.
- FX: The dollar was little changed while the yen slipped toward 158 per dollar. India’s rupee hit a record low, though many emerging market currencies received a lift - the Brazilian real, Mexican peso and Hungarian forint were each about 1% stronger. Bitcoin rose roughly 2% to trade above $81,000.
- BONDS: Long-term government bond yields moved higher in several markets. The 30-year UK gilt yield reached 5.79%, its highest level since 1998. U.S. yields eased slightly on the day, down 2-4 basis points, while the yield curve experienced a modest bull flattening.
- COMMODITIES/METALS: Oil fell about 4% and gold climbed about 1%.
Key market themes
Long bond pressures
Among the three major developed-market asset classes - stocks, bonds and currencies - bonds are emerging as the most stressed by the global energy shock. Short-dated yields are rising in line with price pressures and policy expectations, but it is the long end that is attracting attention. The UK 30-year gilt yield touched 5.79% on Tuesday, matching its highest level since 1998. The U.S. 30-year yield is within 15 basis points of a 23-year peak, and Japan’s 30-year yield sits less than 15 basis points shy of an all-time high. While pension funds, insurers and sovereign wealth funds may find the higher yields tempting, other investors are demanding still greater compensation for perceived fiscal and inflation risks.
Breakevens and inflation expectations
Market-based inflation gauges cooled on the day as oil prices retreated, but that respite may be temporary. Average gasoline prices nationwide are hovering near $4.50 a gallon, and some market forecasts for 2026 now place the average oil price around $100 a barrel. Inflation compensation measures have moved up: the five-year TIPS breakeven has climbed above 2.82%, its highest level since August 2022, while the 10-year TIPS breakeven topped 2.50% for the first time in more than three years. While breakeven rates have known limitations, they are signalling rising price expectations.
Tech leadership and AI re-rating
Alphabet has been a standout in the latest market stretch and is close to surpassing Nvidia to become the world’s most valuable company, a position it briefly held about a decade ago. Alphabet shares have surged nearly 45% over the past six weeks and jumped roughly 10% the day after it reported stronger-than-expected cloud growth and gave upbeat forecasts. The move underscores greater investor selectivity about where AI-driven capital expenditure will have the most impact; hyperscalers are attracting particular enthusiasm.
What to watch next
Several developments could sway markets in the near term:
- Further developments in the Middle East
- Moves in energy markets
- South Korea inflation (April)
- Speeches by European Central Bank board members Claudia Buch, Philip Lane and Piero Cipollone
- Euro zone producer price inflation (March)
- Final euro zone PMIs for April
- European earnings, including Arm Holdings and Novo Nordisk
- UK services and composite PMIs (April, final)
- Canada PMIs (April)
- U.S. ADP payrolls (April)
- U.S. Fed speakers including Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem
- U.S. earnings including Disney, Uber, Apollo, and Warner Bros
Summary
Equities extended gains on Tuesday as optimism around AI, solid earnings reports and easing geopolitical tensions lifted sentiment across markets. The rally was broad, with technology and semiconductors leading the advance. At the same time, long-term bond yields have risen in several countries and market-based inflation expectations have climbed, reflecting ongoing concerns about energy-driven price pressures.
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Opinions expressed are those of the author. They do not reflect the views of any news organization or other entity.