S&P 500 holds near record highs - London Business News

The S&P 500 traded near historical highs around the 7,500-point area in May, supported by positive sentiment toward U.S. stocks. Strong first-quarter earnings improved confidence, with earnings growth rising not only in large-cap technology but across a wider range of index companies. Capital flows favored technology, semiconductors, and artificial intelligence-related stocks, reinforcing expectations for U.S. corporate growth. Demand for chips, data centers, cloud computing, and technology infrastructure kept AI as a central investment theme. Institutional capital continued to favor the technology sector, viewing AI as a long-term driver. Macroeconomic risks remained important, including renewed inflation pressure and elevated Treasury yields near 4.5%, which could limit Federal Reserve easing and pressure growth-stock valuations.

"The S&P 500 continued to hold near its historical highs in May, trading around the 7,500-point area, supported by positive investor sentiment toward the U.S. stock market. The main drivers came from a solid first-quarter earnings season, strong capital flows into technology, semiconductor, and artificial intelligence-related stocks. This suggests that the market is still placing strong expectations on the growth potential of U.S. companies, especially as AI remains the key theme driving investor flows."

"Earnings growth among S&P 500 companies in the first quarter of 2026 showed a strong improvement, not only from large-cap technology stocks but also across a broader range of companies in the index. This helped reinforce confidence that the market's rally is not entirely dependent on a few leading stocks, but is also supported by a broader foundation of corporate performance."

"Investors remain highly interested in companies benefiting from demand for chips, data centers, cloud computing, and technology infrastructure. Institutional capital continues to favor the technology sector, showing that the market views AI not merely as a short-term trend, but as a long-term growth driver for U.S. corporations."

"U.S. inflation has shown signs of heating up again, while U.S. Treasury yields remain elevated at around 4.5%. This could make the Federal Reserve more cautious about easing monetary policy, while also putting pressure on the valuation of growth stocks. With the S&P 500 trading near record highs, the market is likely to become more sensitive to inflation data, Treasury yields, and comments from Fed officials. In addition, oil prices and geopolitical risks could also affect market sentiment."

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