Manufacturing Recovery Amid AI Rally, Oil Prices Surge…Why Did the New York Stock Market Hit Another All-Time High?

On June 1 in New York, all the major stock indices hit fresh all-time highs. The S&P 500 rose 0.26% to 7,599.96, the Dow Jones Industrial Average gained 0.09% to 51,078.88, and the Nasdaq Composite climbed 0.42% to 27,086.81. By contrast, the Russell 2000 small-cap index slipped 0.5%, reflecting a bifurcated market reaction.

The immediate catalyst was stronger-than-expected manufacturing data. May’s ISM Manufacturing PMI jumped to its highest level in four years, easing some recession worries. However, the input-prices subindex remained in the low-80s, signaling that inflationary pressures have yet to subside fully. As a result, bond markets reaffirmed expectations that the Federal Reserve will hold its benchmark rate at 3.50%–3.75% for an extended period.

Comments from Fed officials underscored a “patient” approach to rate cuts, shifting investor focus onto corporate earnings and growth sectors. First-quarter S&P 500 earnings posted double-digit gains, and earnings surprises from technology and AI-related companies emerged as the key driver behind the rally.

At the company level, news of NVIDIA’s next-generation AI chips and a rebound in software stocks fueled strength among large tech names. The Information Technology sector showed a clear positive trend, while defensive stocks and parts of the Energy sector saw pullbacks, widening the divergence between sectors.

On the global front, concerns over renewed conflict in Iran sent Brent crude prices up more than 4%, stoking renewed inflation fears. Yet hopes for renewed US-Iran ceasefire talks prevented a full risk-off shift, making the tug-of-war between “oil volatility vs. AI-led growth” a defining market theme for now. Investors should welcome strong earnings and a manufacturing rebound, while closely monitoring how rising oil and broader price pressures might cement a more hawkish Fed stance.