The S&P 500 closed above 7,800 for the first time, with gains driven almost entirely by AI-linked chipmakers even as Treasury yields stay elevated. Investors now turn to Federal Reserve minutes for clues on the path of rates, while Temasek and former BitMEX chief Arthur Hayes warn that the AI trade could reverse sharply.
The S&P 500 closed above 7,800 for the first time ever, a fresh record. The gain came almost entirely from the technology sector, with chipmakers Advanced Micro Devices and Marvell Technology leading the advance.
Treasury yields have retreated from their recent highs but remain at elevated levels, even as equities push to new records.
Fed minutes on deck
Later Wednesday, investors will watch for the release of the Federal Reserve's minutes from its September meeting, which marked its first rate hike since 2023. The hike went ahead despite political pressure from the White House to move in the opposite direction.
Traders now price a 20.5% chance of another quarter-point rate hike in October, down from about 51% a week earlier, according to CME FedWatch. The same tool puts the odds of a rate hike at the December meeting at 84.5%.
Warnings over an AI-trade reversal
Not everyone is convinced the rally has further to run. Temasek, Singapore's state-owned investment giant, has cautioned that a reversal in the AI trade poses the biggest risk to markets right now. Chief Investment Officer Rohit Sipahimalani told the Milken Asia Summit that AI is such a fast-changing environment that things could change quickly, and investors have to be able to pivot.
Former BitMEX CEO Arthur Hayes went further, warning that trillions of dollars are being wasted on the AI boom. According to CNBC, Hayes said major technology rollouts always end the same way: "There always is a crash, and there always is a bailout."
Source: CNBC
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