Markets Rally as AI Optimism Outweighs Fed Policy Anxiety

The S&P 500 climbed 0.60% to 7722.60, while the Dow Jones Industrial Average finished essentially flat at 52377.57. Despite the gains, Treasury yields ticked higher as traders braced for the Federal Reserve’s Wednesday policy decision. While a rate hold remains the consensus, persistent inflation readings have left a window open for unexpected hawkish action. Standard Chartered strategists currently place the probability of a surprise hike at approximately one-in-four, citing a rebound in tech-sector credit as a factor that has reduced overall financial-market downside risks.

Corporate results dominated the trading floor, often overshadowing broader economic signals. UPS shares jumped 5.9% after the delivery giant issued a positive 2026 outlook, and ASM International surged 7.9% on the back of elevated AI-driven sales forecasts. Broadcom and Anthropic further underscored the sector's momentum by finalizing a $63 billion debt deal to expand AI infrastructure. Conversely, Boeing faced a sharp 11% sell-off following a quarterly loss, marking its worst performance since 2020. HCA Healthcare also struggled, slipping 3.3% as rising costs from treating uninsured patients weighed on profit margins. Meanwhile, the dollar strengthened against the backdrop of Fed uncertainty, while oil futures retreated 1.8% to $99.90 a barrel amid shifting geopolitical chatter.