Stocks advance higher as investors remain optimistic in AI rally

U.S. stock futures were little changed early Wednesday after all three major Wall Street indices closed at new record highs on Tuesday. Futures tied to the S&P 500 and Nasdaq 100 traded near flat, while Dow futures edged slightly higher.

The S&P 500 rose 0.1% to close above 7,600 for the first time, while the Dow Jones Industrial Average gained 229 points and the Nasdaq Composite posted a modest increase. The rally continues to be supported by strong optimism surrounding artificial intelligence and resilient corporate earnings.

Asia-Pacific markets opened broadly higher Wednesday, with Japan‘s Nikkei 225 hitting a record high, as investors appeared to look past uncertainty over U.S.-Iran negotiations aimed at ending the Middle East conflict. Japan’s Nikkei 225 extended early gains to rise 2.1%. Australias S&P/ASX 200 rose 0.36% as the country reported GDP growth of 2.5% year on year for the first three months this year, missing expectations of 2.6%. Growth was pressured by weaker household spending, lower government consumption, as well as impact from severe weather disruption to the mining industry.

In the crypto market, Bitcoin fell to its lowest level since February on Wednesday, dropping more than 2% to around $65,400 as investors continued to shift capital toward traditional financial markets. The weakness in Bitcoin is largely driven by a rotation of liquidity away from cryptocurrencies and into stocks, private market opportunities, and highly anticipated IPOs. Bitcoin remains under pressure as investors favor the stronger momentum currently seen in global equity markets.

Oil prices rose on Wednesday as investors assessed growing uncertainty surrounding U.S.-Iran negotiations and an escalation in military tensions between the two countries. U.S. crude (WTI) climbed above $94.90 per barrel, while Brent crude rose above $97 per barrel.

Gold prices remained under pressure on Wednesday, trading below the $4,500 level as a stronger U.S. dollar and rising oil prices reduced demand for the precious metal. The latest weakness comes as renewed hostilities between the U.S. and Iran have boosted safe-haven demand for the U.S. dollar while also driving oil prices higher. Higher energy prices have increased concerns about inflation, leading investors to expect that the Federal Reserve may keep interest rates elevated for longer, a negative factor for non-yielding assets such as gold.

Investors are now focusing on key U.S. economic data, including the ADP employment report and ISM Services PMI, for clues on the strength of the U.S. economy and the Federal Reserve‘s future policy path ahead of Friday’s Nonfarm Payrolls report. In the near term, developments in the Middle East, movements in the U.S. dollar, and interest rate expectations are expected to remain the main drivers of gold prices.