U.S. stocks ended Friday at record highs, capping another strong week and month for investors as booming artificial intelligence demand fueled technology shares and optimism grew around a possible diplomatic breakthrough between the United States and Iran.
The Dow Jones Industrial Average finished above 51,000 for the first time, while the S&P 500 and Nasdaq Composite also closed at all-time highs. Markets were lifted by strong corporate earnings, particularly from technology companies tied to AI infrastructure, even as investors weighed inflation risks and uncertainty surrounding Middle East tensions.
President Donald Trump said in a social media post that he would make a final decision on a potential Iran agreement on Friday. The announcement came after Tehran signaled that concrete action was needed to move negotiations forward, keeping investors focused on geopolitical developments that could influence energy prices and global economic growth.
Technology stocks led the market higher after Dell Technologies delivered stronger-than-expected results and raised its full-year revenue and profit outlook. Shares of Dell soared 32.8%, helping drive the technology sector nearly 2% higher.
The gains spread across the AI ecosystem. Hewlett Packard Enterprise jumped 12.6%, while Super Micro Computer advanced 11.6%. Microsoft added 5.4%, reinforcing investor confidence in companies benefiting from growing demand for artificial intelligence infrastructure and cloud computing services.
The software services sector surged more than 6%, fully recovering losses accumulated since late January when concerns about AI-related disruption had pressured technology valuations.
Earlier in the trading session, all three major indexes reached intraday record levels. Investors appeared increasingly willing to look past concerns about inflation and geopolitical uncertainty, focusing instead on strong earnings growth and expanding AI-related investment.
The Dow rose 363.37 points, or 0.72%, to close at 51,032.34. The S&P 500 gained 16.44 points, or 0.22%, ending at 7,580.07. The Nasdaq Composite climbed 55.15 points, or 0.21%, to finish at 26,972.62.
Small-cap stocks lagged behind the broader market. The Russell 2000 index fell 0.6% on Friday despite posting gains for both the week and month.
Weekly performance remained impressive across major indexes. The S&P 500 advanced 1.43%, extending its winning streak to nine consecutive weeks, the longest run since December 2023. The Nasdaq gained 2.39%, while the Dow added 0.9%. The Russell 2000 increased 1.72%.
Monthly returns were even stronger. Since April 30, the Nasdaq climbed 8.36%, the S&P 500 gained 5.15%, the Dow rose 2.78%, and the Russell 2000 advanced 4.24%.
Market strategists pointed to earnings growth as the primary force behind the rally.
“There’s definitely euphoric sentiment in the market around AI. The rally has really been driven by earnings,” said Ohsung Kwon, chief equity strategist at Wells Fargo.
Kwon suggested investors maintain exposure to AI-related companies while using options strategies to generate additional income.
Trading activity also reflected growing investor participation. Melissa Brown, head of investment decision research at SimCorp, noted that market volume has increased in recent weeks, a sign that more investors are entering the market.
Not every sector shared in the gains. Communication services stocks slipped as Alphabet fell 2.5%. Consumer staples also weakened, with Costco dropping 3.9% and Walmart declining 2.6%.
Automakers faced pressure after reports indicated the Trump administration wants vehicles built in North America to contain 82% regional content to qualify for favorable treatment under the U.S.-Mexico-Canada Agreement. General Motors fell 1.3%, while U.S.-listed shares of Stellantis dropped 2.7%.
Economic data released earlier in the week added another layer of complexity for investors. Inflation accelerated in April at its fastest pace in three years, while first-quarter U.S. economic growth was revised lower to an annual rate of 1.6%.
Federal Reserve officials also struck a cautious tone. Kansas City Fed President Jeffrey Schmid warned that higher energy costs may not be temporary, while Vice Chair for Supervision Michelle Bowman indicated that persistent inflation could require tighter monetary policy.
Financial markets now largely expect the Federal Reserve to leave interest rates unchanged through most of the year, though traders continue to price in the possibility of a quarter-point rate increase in December.
Among individual companies, Gap shares plunged 15.4% after the retailer lowered its annual sales outlook. American Eagle Outfitters fell 11.8% after leaving its comparable sales forecast unchanged.
Despite record index levels, market breadth remained mixed. On the New York Stock Exchange, declining stocks slightly outnumbered advancing issues. Trading volume reached 23.9 billion shares, significantly above the recent 20-day average of 19.36 billion, signaling heightened investor activity as markets pushed to new highs.
The combination of strong earnings, AI-driven growth expectations, and hopes for reduced geopolitical tensions helped power Wall Street to another milestone. Investors now face the challenge of determining whether corporate performance can continue to outweigh mounting concerns about inflation, interest rates, and global uncertainty.
