A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 22, 2025.
Jeenah Moon | Reuters
The S&P 500 reached new heights on Tuesday as investors monitor the risks to the market’s rally to record levels.
The broad market index hovered around the flatline but had reached a new all-time intraday high earlier in the session, its fourth in a row. The Nasdaq Composite fell 0.3%, while the Dow Jones Industrial Average outperformed, rising 209 points, or 0.5%, and scoring a fresh all-time high during the trading day.
The Dow’s move was supported by a move higher in Boeing. The stock rose on the heels of President Donald Turmp praising Uzbekistan’s president, Shavkat Mirziyoyev, for signing a “GREAT Deal” with the aerospace company that was worth more than $8 billion. Shares were also bolstered by talks between the U.S. and China of a “huge” Boeing deal.
The three major averages closed at all-time highs on Monday— marking three consecutive winning sessions for the S&P 500 — and recorded fresh intraday records on Monday. Gains accelerated in the latter half of the trading session after Nvidia shares jumped nearly 4% higher on the back of an announcement from the chipmaker that it will invest $100 billion in OpenAI for the buildout of data centers.
Questions remain on whether the AI trade can continue powering U.S. equities, particularly given the risks tied to elevated market valuations.
Joe Davis, Vanguard chief global economist, noted that the explosive growth and adoption in AI, coupled with the Federal Reserve’s latest interest rate cut, are the two notable factors that have led to higher multiples while “fundamentals are okay.”
“When you’re a little bit at a richer levels, cracks are exposed to bad news,” Davis said on CNBC’s “Closing Bell: Overtime.” “That’s not to say that it’s going to materialize, but I think we need to see acceleration and growth in the back half of the year or some progress on inflation, which remain stubborn. And I think either of those dimensions would help.”
The latest reading of the personal consumption expenditures price index — which is the Fed’s preferred inflation measure — will be released Friday and is expected to give clues on the path of monetary policy for the remainder of the year.
Investors are also watching the increasing chance of a government shutdown ahead of a Sept. 30 deadline after the Senate last week rejected Republican and Democratic proposals to at least temporarily fund the federal government. On Tuesday, Trump seemed to cancel a planned meeting this week with top Democrats in Congress, saying that no meeting with them regarding the shutdown “could possibly be productive.”
The stock market has historically brushed off concerns tied to government shutdowns, but this time around could be different as the economic backdrop heading into a shutdown is the weakest in more than two decades.