Chip stocks are jumping on AI optimism; Dow ends at record high

Wall Street ended higher on Tuesday as chip stocks rose on renewed AI optimism, Moderna rebounded and the Dow Jones Industrial Average hit a record high. Moderna jumped after BofA Global Research raised its price target for the drugmaker, lifting the S&P 500 healthcare index. Memory and storage technology stocks rose after Nvidia CEO Jensen Huang, speaking at the Consumer Electronics Show in Las Vegas, detailed upcoming AI processors that include a new layer of storage technology.

SanDisk, Western Digital, Seagate Technology and Micron Technology all reached record highs.The PHLX chip index also hit an all-time high, bringing gains in the first three trading sessions of 2026 to about 8%.

“I think we’re going to have a very strong earnings season for Big Tech, and all those capex estimates we’re hearing about are going to be revised upward 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 fade, and upcoming releases include the Job Openings and Labor Turnover Survey (JOLTS) on Wednesday and Friday’s December jobs report. Weaker-than-expected employment data could strengthen the case for central bank rate cuts.

As we enter fourth-quarter earnings season in the coming weeks, valuations on Wall Street remain relatively pricey. According to LSEG data, the S&P 500 is trading at about 22 times expected earnings, down from November’s 23 but above the index’s five-year average of 19. The Dow Jones approached an all-time milestone of 50,000 points.

According to preliminary data, the S&P 500 gained 42.92 points, or 0.61%, to end at 6,944.97, while the Nasdaq Composite gained 147.40 points, or 0.63%, to 23,543.22. The Dow Jones Industrial Average rose 489.12 points, or 1.00%, to 49,466.30.

Data on Tuesday showed S&P Global’s final composite PMI fell to 52.7 in December from 53.0 in the previous month, while the services PMI fell to 52.5 from 52.9. Markets also analyzed comments from Richmond Federal Reserve President Tom Barkin, who reiterated the US central bank’s cautious approach on further cuts, in contrast to Governor Stephen Miran’s call for aggressive cuts in a Fox Business interview. Investors ignored fears of broader geopolitical fallout after US forces captured Venezuelan President Nicolas Maduro this weekend. They gambled that the move could pave the way for American companies to gain access to Venezuela’s oil reserves.

Oil stocks fell after robust gains in the previous session, with giants Exxon Mobil and Chevron losing ground. Comments from Nvidia’s Huang about the efficiency of the company’s new chips raised concerns about demand for data center cooling systems. Shares of Johnson Controls and Trane Technologies fell. AIG shares tumbled after the insurance giant announced that CEO Peter Zaffino would resign.