Stock Market Hits Fresh Records as AI Goes Nuts & Protests Over Poor School Conditions Erupt in France

The S&P 500 hit another all-time high yesterday, crossing a total valuation of over $71 trillion, even as the market faces headwinds from the war in Iran driving up energy prices and a sharp increase in interest rates. The index notched its 28th record close of the year, up 14% year-to-date and 24% since its March bottom. Meanwhile, over a quarter million people marched in France yesterday in support of a student-led protest against underinvestment in schools, with the demonstrations unfolding against a rapidly deteriorating fiscal situation that has some comparing France to Greece during the Eurozone debt crisis.

The Market's Narrow Rally

The rally stems from headwinds abating "just ever so slightly." Both oil and yields fell yesterday, with Brent crude dipping below the triple-digit threshold and the 10-year Treasury falling a couple basis points. Renewed optimism around the AI trade, fueled by the rise of agents like Muse, has also contributed.

But the hosts emphasized this is not a broad rally. Mega-cap tech stocks like Nvidia, Apple, and Microsoft have been doing the heavy lifting. "If you exclude AI from the market this year, the S&P 500's gains would be cut in half," Toby noted. At the beginning of the month, more than half the stocks in the index were trading below their 200-day moving averages.