S&P 500 reaches record high as AI trade returns

NEW YORK, Jan 7 (Reuters) – The S&P 500 climbed to a record high on Wednesday, lifted by gains in Nvidia, Alphabet and other AI-related stocks, while a dip in JPMorgan weighed on the Dow Jones Industrial Average.

Nvidia, Microsoft, Broadcom and Amazon all climbed more than 1%, while Alphabet jumped 2.5% as investors jumped back into AI stocks following recent worries they were overvalued.

Underscoring investor appetite for heavyweight AI players, Anthropic is planning a multibillion-dollar fundraise that would value the Claude chatbot maker at $350 billion. That would make the privately held company more valuable than the vast majority of corporations, including Advanced Micro Devices, Chevron and Wells Fargo.

“Investors have come into 2026 with a similar playbook to last year: Buy tech and forget about it. Rumors that the AI trade was done turned out not to be true,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Shares of housing acquisition companies tumbled after President Donald Trump said his administration is moving to ban Wall Street investors from buying single-family homes, in a bid to reduce home prices.

American Homes 4 Rent and Blackstone dropped more than 4%, while real estate platform Zillow added 2.5%.

JPMorgan Chase fell 2.4% after Wolfe Research downgraded the bank to “peer perform” from “outperform.”

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.

The S&P 500 was up 0.03% at 6,946.92 points after hitting an intraday high of 6,965.69.

The Nasdaq gained 0.48% to 23,660.86 points, while the Dow Jones Industrial Average was down 0.54% at 49,193.37 points.

Eight of the 11 S&P 500 sector indexes rose, led by materials, up 2.04%, followed by a 1.96% gain in health care.

Data on Wednesday showed U.S. job openings fell more than expected in November after rising marginally in October, while a separate ADP report showed that private payrolls increased less than expected in December.

While the latest labor market datasets mark a return to the standard release of economic data disrupted by the U.S. government shutdown, they did little to change expectations of interest rate cuts from the Federal Reserve ahead of Friday’s key government payrolls report.

Investors were also monitoring geopolitical developments after the U.S. said it seized a Russian-flagged, Venezuela-linked tanker as part of Trump’s aggressive push to dictate oil flows in the Americas and force Caracas’ socialist government to become its ally.

The White House said on Tuesday that Trump was discussing options for acquiring Greenland, including potential use of the U.S. military.

Memory and storage technology companies gave up some of their gains following a recent rally. Western Digital and Seagate Technology dropped more than 6%.

First Solar fell more than 10% after Jefferies downgraded the solar panel maker’s rating to “hold” from “buy.”

Declining stocks outnumbered rising ones within the S&P 500 by a 2.5-to-one ratio.

The S&P 500 posted 28 new highs and 17 new lows; the Nasdaq recorded 90 new highs and 53 new lows.

(Reporting by Noel Randewich in San Francisco and Chuck Mikolajczak in New York; Additional reporting by Purvi Agarwal and Nikhil Sharma in Bengaluru; Editing by Shinjini Ganguli and Matthew Lewis)