US Stock Market Nears Record Highs Amid Strong Corporate Earnings and AI Investment

The U.S. stock market is approaching new record highs, driven by robust corporate earnings and significant investments in artificial intelligence. The S&P 500 added 0.5% to its all-time high set the day before, while the Dow Jones Industrial Average climbed 254 points, or 0.5%, nearing the 50,000 level for the first time since the onset of the Iran conflict. The Nasdaq Composite also rose 0.5%, extending its own record.

Cisco Systems led the market surge, with its stock jumping 14.6%—potentially its best day in nearly 15 years—after reporting better-than-expected profit and revenue for the latest quarter. CEO Chuck Robbins noted the company saw "very strong, broad-based demand for our products."

The ongoing demand for artificial intelligence technology has been a major driver of market growth. Cerebras Systems, an AI processor company, raised $5.55 billion through its initial public offering, with shares set to begin trading on the Nasdaq later in the day.

Analysts, including Gargi Pal Chaudhuri, chief investment and portfolio strategist at BlackRock, observed that the impact of AI is broadening quickly, now driving earnings growth across semiconductors, infrastructure, and parts of the industrial economy.

Other companies reporting strong earnings included StubHub Holdings, up 19.3%, and Viking Holdings, up 10%. These gains suggest that consumers continue to spend on non-essential goods, such as concert tickets and river cruises, despite economic concerns.

Economic data released Thursday showed that shoppers spent less at U.S. retailers last month than economists expected. However, the deceleration, excluding gasoline and automobile sales, wasn't as severe as anticipated. Additionally, more U.S. workers filed for unemployment benefits last week, though the number remains relatively low compared to historical figures.

In the bond market, Treasury yields remained steady, with the 10-year Treasury yield edging down to 4.45% from 4.46% late Wednesday. Internationally, European stock indexes rose following a mixed finish in Asia. Japan's Nikkei 225 fell 1%, while South Korea's Kospi jumped 1.8% to another record, driven by AI-related stocks.

In China, stocks were nearly flat in Hong Kong and down 1.5% in Shanghai as Chinese leader Xi Jinping met with U.S. President Donald Trump in Beijing. Some investors hope the meeting could lead to China leveraging its economic ties with Iran to reopen the Strait of Hormuz, which has been closed due to the conflict, causing oil prices to rise. Brent crude oil fell 0.1% to $105.54 per barrel on Thursday but remains significantly higher than its pre-war price of approximately $70.