Tech titans power Nasdaq to 20,000 for first time in AI-driven market frenzy

The Nasdaq index crossed the 20,000-point mark for the first time on Wednesday, driven by a sustained rally in technology stocks.

Optimism around artificial intelligence (AI) advancements and expectations of a favourable regulatory environment have helped push the tech-heavy index to new heights. The Nasdaq rose 1.6% to close at an all-time high of 20,001.42 points, marking a milestone for the US stock market. This comes just weeks after the index first crossed 19,000 points in early November.

Technology companies have been at the forefront of this market surge, with many investors betting on AI-driven earnings growth in the coming quarters. The strong performance of tech giants such as Apple, Microsoft, and Nvidia has been instrumental in propelling the Nasdaq to this historic level.

Apple, Microsoft, and Alphabet are currently members of the exclusive $3-trillion club, with Apple holding a narrow lead in market capitalisation. These companies have benefited from the increasing adoption of AI technologies, which are expected to reshape industries ranging from healthcare to finance.

IMPACT OF THE POLITICAL LANDSCAPE
The recent rally can also be attributed to hopes for favourable policies under Donald Trump’s presidency. Since his election win, there has been optimism that tax cuts and looser regulations could benefit big tech firms. In addition, the Republican Party’s control of both houses of Congress has further fuelled market expectations.

Investors are also encouraged by the Federal Reserve’s signals of monetary easing, which could provide further support to the US economy and the stock market.

INFLATION DATA AND FED POLICY
Wednesday’s market gains followed the release of inflation data from the US Labour Department. The report showed that consumer prices in the US rose at the fastest pace in seven months during November. However, the data was largely in line with market expectations, which eased fears of a potential negative surprise.

The inflation figures have reinforced bets that the Federal Reserve will cut interest rates later this month. Tom Bruce, a macro investment strategist at Tanglewood Total Wealth Management, told Reuters, “There were some fears that you could have had an upside surprise to inflation and that may have made the Fed rethink cutting next week.”

While the Nasdaq soared, the S&P 500 also saw gains, boosted by the positive inflation data. However, the Dow Jones Industrial Average faced pressure due to declines in healthcare stocks, particularly UnitedHealth Group.