US Stocks Near Record Highs as Tech Sector Drives Gains; Nikkei 225 Surges After Japan Election

US Stocks Trade Near Record Highs Amid Tech Sector Strength

US stock markets are holding near historic highs, with the S&P 500 and Nasdaq Composite benefiting from robust gains in the technology sector. The latest rally continues a trend driven by investor optimism about artificial intelligence, despite recent volatility.

Nvidia leads the momentum, with its shares up over 150% year-to-date, fueled by strong demand for its AI chips. The company’s market capitalization surpassed $3 trillion in early June, solidifying its position as one of the world’s most valuable firms. Other technology giants, including Microsoft and Alphabet, have also contributed to the sector’s outperformance.

Despite the surge, volatility has increased as investors weigh potential risks related to artificial intelligence. Concerns about regulation, competition, and overheating valuations have triggered short-term swings in key indexes. According to analysts at Goldman Sachs, "AI enthusiasm is a powerful force, but markets are increasingly sensitive to new data points and policy developments."

Wall Street’s Broader Performance and Economic Considerations

The Dow Jones Industrial Average has lagged behind tech-focused indexes, reflecting more muted momentum in traditional industries. Economic data on inflation, employment, and consumer sentiment remain closely watched as investors consider the Federal Reserve’s future interest rate path. The US Labor Department reported last week that nonfarm payrolls rose by 272,000 in May, exceeding expectations and providing support for equities.

Fed policymakers have signaled a cautious approach to rate cuts, citing ongoing inflationary pressures. Mary Daly, President of the San Francisco Fed, stated, "We are not pre-committing to any particular policy trajectory." Markets are pricing in the possibility of at least one rate reduction by the end of 2024, according to CME Group’s FedWatch tool.

Nikkei 225 Jumps Following Japanese Election Result

Japan’s Nikkei 225 index surged over 2.1% in Monday trading after the ruling coalition achieved a super majority in parliamentary elections. The decisive victory increases policy stability, bolstering investor confidence in Japan’s economic outlook.

The benchmark closed above 40,000 points for the first time in several weeks, recovering losses from recent global market selloffs. Financial groups, automakers, and technology exporters led gains, with Sony and Toyota both up more than 3% on stronger earnings guidance and positive sentiment.

Prime Minister Fumio Kishida’s government has committed to long-term fiscal stimulus and pro-business initiatives. In a statement, Finance Minister Shunichi Suzuki said, "We will continue our efforts to restore fiscal health and build a stable economic foundation." The yen weakened modestly against the dollar, further supporting exporter shares in Tokyo.

Global Market Outlook

International sentiment remains mixed as investors digest changing political landscapes and central bank decisions. Some analysts warn that continued volatility is likely as markets evaluate the sustainability of AI-driven rallies and assess the global impact of policy shifts in major economies.