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US stocks have hit their longest monthly winning streak in four years as artificial intelligence hype, declining interest rates and Donald Trump’s move to dial back his trade war cheered investors.
The S&P 500 rose 2.4 per cent in October for a sixth consecutive month of gains, after notching its 36th all-time high this year on Tuesday. It marks the best run for the index since August 2021.
The tech-heavy Nasdaq Composite’s seven straight months of positive returns, following a 4.8 per cent gain in October, is its longest since early 2018.
US equities have rebounded from a sell-off in April sparked by Donald Trump’s tariff announcements, driven higher by a mix of strong corporate earnings and investor excitement surrounding the AI investment boom.
“There was some trepidation about AI and its impact on the stock market at the start of the week, but that’s now totally given way to pure bullishness,” said Jim Bianco, president of Bianco Research, a consultancy.
Concerns about an AI bubble in the making, and signs of weakness in the US labour market, were overshadowed by a torrent of bullish spending announcements and strong earnings from Silicon Valley tech groups.
The prospect of a one-year deal between China and the US to postpone export controls on rare earths and chips fanned investors’ optimism.
The Federal Reserve also delivered its second rate cut of the year on Wednesday. Jay Powell’s assertion that a December reduction was “far from” a foregone conclusion only briefly rattled investors’ confidence.
The rate cut followed an explosion of mergers and acquisitions across corporate America, with more than $80bn worth of deals struck on Monday alone.
“There’s a greater consensus that the impact of AI is going to be real and transformational, earnings season is turning out well, we are at the beginning of a Fed rate cutting cycle, and there’s optimism that there could be a reasonable [US trade] deal with China,” said Venu Krishna, head of US equities strategy at Barclays.
Tech giants Alphabet, Amazon, Meta and Google this week reported a combined $112bn of capital expenditure in the past quarter, as they pour money into AI infrastructure such as chips and data centres.
Amazon’s shares rose as much as 12 per cent on Friday, adding almost $300bn to its market value after the company’s cloud business reported its strongest quarterly growth in nearly three years
Meta earlier in the week sold $30bn of bonds to finance AI projects. Despite its shares falling sharply on concerns about overspending, the bond sale drew about $125bn of orders — the largest-ever demand in dollar terms for a US investment-grade corporate bond.
Nvidia on Wednesday became the first company to reach a $5tn market capitalisation a day after Apple topped $4tn for the first time.
“Yes, this is a bull market that’s run a long way . . . but at the moment the tech firms just keep on delivering,” said John Bilton, head of global multi asset strategy at JPMorgan Asset Management. “The fact everyone is telling me [tech] is a bubble makes me think it’s got further to go.”
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