S&P 500, Nasdaq back at record highs as buying returns to AI-linked stocks

Wall Street's love affair with Artificial Intelligence (AI) continued to push major indices to historic highs on Wednesday. The S&P 500 and Nasdaq Composite both logged their 33rd and 32nd record closes of 2025, respectively, with the S&P 500 surging past 6,750 and the Nasdaq climbing above 23,000.

The benchmark Dow Jones Industrial Average, however, failed to join the rally and ended the session flat, ending lower for the third session in a row.

Nvidia led the charge yet again with a gain of nearly 2%, after CEO Jensen Huang stated that demand for their next-generation Blackwell chips is "really, really" high. Nvidia's market capitalisation is now nearing $4.6 trillion.

Minutes of the last FOMC meeting in September projected a divided house over the future of rate cuts. While most participants believed further easing was appropriate for the remainder of 2025, seven out of 19 projected no more rate cuts this year. A majority also emphasized upside risks to their inflation outlook, suggesting the Fed will carefully weigh inflation and employment risks before making its next move.

Nevertheless, the CME FedWatch Tool places a 94.1% probability on a 25 basis point rate cut at the October 29th meeting. All eyes will be on Fed Chair Jerome Powell, who is scheduled to address a gathering later this evening.

Meanwhile, the economic turbulence from the ongoing government shutdown entered its eighth day, with its effects becoming more pronounced. Airports continued to report delayed flights as essential staff work without guaranteed pay. The Internal Revenue Service (IRS) is also heavily impacted, furloughing nearly half its workforce—34,000 out of 74,299 workers.

The uncertainty is compounded by recent statements from President Donald Trump, who earlier suggested not all federal employees would receive back pay once the shutdown ends, despite having previously legalized back pay during his first term in 2019.

Analysts from Piper Sandler believe that any correction would be a healthy entry point and advised clients to stay long but cautious. On the flip side, clients of BofA have been net sellers of US equities and ETFs for the fourth straight week.

Earnings season begins for Corporate America as well today with stocks like Delta Airlines, PepsiCo and Delta Airlines will report results.