Nasdaq Reaches New High as AI Chip Sector Experiences Significant Gains

Market Rally Continues as Intel Surges on Apple Talks

May 5 - The Nasdaq composite jumped to a record high on Tuesday, propelled by a surge in Intel and other AI-related stocks. The U.S.-Iran ceasefire held firm, alleviating concerns about escalating hostilities in the Strait of Hormuz. The ceasefire was confirmed by Washington, allowing investors to focus on strong quarterly earnings.

Investors' attention turned to AI-related companies, with the Philadelphia SE Semiconductor index reaching a record high after jumping 4.7%. Chip designer AMD rallied 4.4% ahead of its quarterly report. Intel's shares surged 14% after Bloomberg News reported that Apple had held exploratory discussions about enlisting the company's chipmaking services to produce the main processors for its devices.

Earnings Growth Exceeds Expectations S&P 500 companies are projected to post aggregate earnings growth of 28% year-over-year for the first quarter, more than double the expectation of 14% at the start of April, according to LSEG I/B/E/S. This optimism is largely driven by Wall Street's AI heavyweights.

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Business spending remains strong, driven by investments in AI and other productivity tools. Consumers continue to spend, further boosting the market. "Markets are following fundamentals. Earnings are coming in pretty strong, and the expectation is that will carry forward into the rest of the year," said Tom Hainlin, an investment strategist at U.S. Bank Wealth Management in Minneapolis.

The S&P 500 gained 0.89% to 7,264.87, while the Nasdaq Composite jumped 1.10% to 25,342.82. The Dow Jones Industrial Average rose 0.62% to 49,243.90 points. With Tuesday's rally, the Nasdaq is up 9% in 2026. Brent crude futures fell but still traded at $110 a barrel.

Nine of the 11 main S&P 500 sector indexes rose, led by a nearly 2% gain in materials. Data on Tuesday showed U.S. job openings fell to 6.866 million in March, slightly above the 6.835 million estimate. The Institute for Supply Management's Non-Manufacturing Purchasing Managers' Index for April came in at 53.6, narrowly missing the estimate of 53.7.

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Grain trader Archer-Daniels-Midland rose 1.2% after reporting better-than-expected first-quarter profit on higher margins. DuPont gained 7.6% after the industrial materials maker lifted its annual profit forecast. Shares of Pinterest soared 9.3% after the image-sharing platform forecast second-quarter revenue above analysts' estimates.

Advancing issues outnumbered decliners by a 2.63-to-1 ratio on the NYSE. There were 432 new highs and 77 new lows on the NYSE.