Key Highlights

US equities closed higher on Tuesday, with the S&P 500 up 0.8%, the Nasdaq 100 up 1.7%, and the Dow Jones closing at a record 52,319. Easing inflation risks and a chipmaker rebound were the primary drivers of the session's gains, which capped a strong run for equities heading into the end of the second quarter.

Technology and semiconductor stocks led the rally, with chipmakers extending a rebound from recent weakness tied to concerns over stretched AI-related valuations. Strong forward guidance from semiconductor producers helped ease those concerns, even as hyperscale cloud providers continue to commit substantial capital spending toward AI infrastructure build-outs.

Beyond the technology sector, easing inflation risk also played a significant supporting role. Oil prices remained near pre-conflict levels, helping calm fears that the Federal Reserve could be forced into a renewed hiking cycle to contain inflation. This steadier backdrop supported gains across more traditional, economically sensitive sectors as well, helping the Dow Jones outperform the broader benchmarks over the course of June.

The session's strength fits within a broader pattern of robust performance for US equities through the second quarter. The S&P 500 rose more than 14% and the Nasdaq surged about 20% over the quarter, marking their strongest quarterly performances since the second quarter of 2020. The Dow gained more than 12% over the same period, its best quarterly showing since the fourth quarter of 2022.

This sustained rally has been underpinned by a combination of resilient corporate earnings, continued AI infrastructure investment, and a gradually improving inflation outlook. Even as individual stocks showed significant dispersion in performance on any given session, the broader index-level trend has remained firmly positive.

Investors will likely continue to monitor upcoming corporate earnings reports and inflation data for further confirmation of whether the conditions supporting this rally, namely easing price pressures and resilient guidance from key sectors, can be sustained into the third quarter and beyond.