AI Rally Amid Inflation Warnings, US Stock Market Hits All-Time High

Early this morning (April 30 in the U.S.), New York markets closed higher despite accelerating inflation and the risk of conflict with Iran. The S&P 500 climbed 1.0% to 7,209.01, setting another all-time closing high, the Dow Jones Industrial Average jumped 1.6%, and the Nasdaq Composite rose 0.9%.

At the open, investors were weighed down by March’s personal consumption expenditures (PCE) index, which rose 0.7% month-over-month and 3.5% year-over-year—the fastest pace in about three years. Core PCE came in at 3.2%, well above the Federal Reserve’s 2% target, prompting Chair Jerome Powell to reaffirm that the Fed will remain in “hold mode,” keeping its benchmark interest rate at 3.5–3.75% for the time being.

Sentiment shifted, however, when Alphabet reported results nearly double analysts’ forecasts and said its AI investments are fueling growth across every business segment. Buying momentum spread across large-cap technology and communications names. Caterpillar, Eli Lilly and Royal Caribbean also outperformed on earnings surprises, while Meta and Microsoft saw some profit-taking after investors digested their plans to expand data-center and AI infrastructure investments.

On the geopolitical front, Iran’s blockade of the Strait of Hormuz and a subsequent U.S. naval response that halted oil exports pushed crude above $105 per barrel intraday before it retreated. Meanwhile, the yield on 10-year U.S. Treasuries dipped slightly to roughly 4.4%. Despite renewed inflationary pressures and rising geopolitical tension, markets appear to be betting that corporate profits remain robust enough to endure a high-rate, high-oil-price environment.