US stocks: Dow ends at record high; chip stocks jump on AI optimism

WALL Street ended higher on Tuesday, as chip stocks surged on renewed AI optimism, Moderna rallied and the Dow Jones Industrial Average reached a record high.

Moderna jumped almost 11 per cent after BofA Global Research raised its price target on the drugmaker, helping lift the S&P 500 healthcare index 1.96 per cent.

Memory and storage technology stocks rallied after Nvidia CEO Jensen Huang, speaking at the Consumer Electronics Show in Las Vegas, gave details about upcoming AI processors that include a new layer of storage technology.

SanDisk jumped over 27 per cent, Western Digital rallied 17 per cent, Seagate Technology gained 14 per cent and Micron Technology rose 10 per cent, with all four stocks hitting record highs.

The PHLX chip index also hit an all-time high, up 2.75 per cent for the day and bringing its gain in the first three trading sessions of 2026 to about 8 per cent.

“I think we’re going to have a very strong earnings season for Big Tech, and all those capex estimates that we hear about are going to be revised higher again,” said Jed Ellerbroek, portfolio manager at Argent Capital in St. Louis.

Investors are looking forward to reliable economic data as the effects of a record 43-day federal government shutdown wear off, and upcoming releases include the Job Openings and Labor Turnover Survey on Wednesday and Friday’s jobs report for December.

Weaker-than-expected employment data could strengthen the case for central bank interest rate cuts.

Heading into fourth-quarter earnings season in the next few weeks, valuations on Wall Street remain relatively pricey. The S&P 500 is trading at about 22 times expected earnings, down from 23 in November, but above the index’s five-year average of 19, according to LSEG data.

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The S&P 500 climbed 0.62 per cent to end the session at 6,944.82 points.

The Nasdaq gained 0.65 per cent to 23,547.17 points, while the Dow Jones Industrial Average rose 0.99 per cent to 49,462.08 points, nearing the historic 50,000 mark.

Volume on US exchanges was relatively heavy, with 18.7 billion shares traded, compared with an average of 16.1 billion shares over the previous 20 sessions.

Data on Tuesday showed S&P Global’s final composite PMI slipped to 52.7 in December from 53.0 in the prior month, while the services PMI eased to 52.5 from 52.9.

Markets also parsed comments from Richmond Federal Reserve President Tom Barkin, who reiterated the US central bank’s careful take on further cuts, in contrast to Governor Stephen Miran’s call for aggressive cuts in a Fox Business interview.

Investors brushed aside fears of broader geopolitical fallout after US forces captured Venezuelan President Nicolas Maduro over the weekend, betting the move could pave the way for US firms to gain access to Venezuela’s oil reserves.

Oil stocks dipped after robust gains in the prior session, with giants ExxonMobil and Chevron losing 3.4 per cent and 4.5 per cent, respectively.

Comments by Nvidia’s Huang about the efficiency of the company’s new chips raised concerns about demand for data centre cooling systems. Shares of Johnson Controls fell 6.2 per cent, while Trane Technologies dropped 2.5 per cent. AIG shares tumbled 7.5 per cent after the insurance giant said CEO Peter Zaffino would step down.

Advancing issues outnumbered falling ones within the S&P 500 by a 3.1-to-one ratio.

The S&P 500 posted 62 new highs and 8 new lows; the Nasdaq recorded 126 new highs and 42 new lows. REUTERS