The S&P 500’s most recent performance shows it hit a new all-time high earlier this week, but it’s worth noting the very latest updates. Reports from February 18, 2025, indicate the S&P 500 closed at a record high, driven by a late rally with standout performances from stocks like Intel and Supermicro.
However, some market chatter from yesterday, February 20, suggest it retreated from that peak, with mentions of a 0.9% drop and the Dow sliding over 600 points, tied to concerns like Walmart’s cautious profit forecast. The S&P 500 was indeed on a tear, hitting intraday and closing records recently, like 6,122.8 on January 24, 2025, and climbing further into mid-February. But yesterday’s pullback might’ve paused that streak.
The explosion of interest in artificial intelligence has been a massive tailwind. Companies like Nvidia, with its dominance in AI chips, have seen astronomical gains—its stock was up over 173% in the past year as of late January 2025. This isn’t just Nvidia; the broader “Magnificent Seven” tech cohort (think Apple, Microsoft, Alphabet, etc.) has fueled nearly two-thirds of the S&P’s gains in 2024, driven by AI optimism and strong earnings.
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Despite high interest rates, U.S. companies have posted robust profits. For Q4 2024, S&P 500 earnings grew about 8% year-over-year, beating expectations, with tech leading but even cyclical sectors like industrials chipping in. Goldman Sachs noted on February 18 that 2025 earnings forecasts were revised up to $268 per share, reflecting confidence in sustained growth. This resilience has bolstered stock valuations.
The U.S. economy has defied recession fears. GDP growth held steady—around 2.8% annualized in late 2024—while inflation cooled to 2.6% by December, per CPI data. Unemployment ticked up slightly to 4.2%, but consumer spending remained solid, especially in services. This “soft landing” vibe has kept investors bullish, as seen in market reports from mid-February.
The Federal Reserve cut rates by 25 basis points in December 2024 to a 4.25%-4.5% range, signaling a pivot from its hawkish stance. While rates are still elevated, the anticipation of a less restrictive policy in 2025—maybe two more cuts—has eased pressure on equities. Analysts from January note how this shift sparked a rally, though some caution lingered after Fed Chair Powell’s less-dovish-than-expected comments.
The AI sector’s impact on the S&P 500’s recent all-time highs has been nothing short of transformative, acting as a turbocharger for the index’s gains. The “Magnificent Seven”—Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and especially Nvidia—have been the backbone of the S&P 500’s rally, with AI as their secret sauce. These companies accounted for roughly 60-65% of the index’s 28% gain in 2024, per market analyses from late January.
Nvidia’s role stands out: its stock soared over 173% in the past year as of January 22, 2025, pushing its market cap past $3 trillion. Why? Its chips power the AI revolution—think ChatGPT, autonomous driving, and enterprise AI tools. X posts from early February buzz with phrases like “Nvidia’s AI monopoly,” reflecting investor hype. Nvidia’s Q4 2024 earnings (reported in early 2025) smashed estimates, with revenue up 200% year-over-year, driven by AI data center demand. Microsoft and Alphabet also reported double-digit growth, tying profits to AI cloud services and ad tech enhancements.
it’s not just the giants. Companies like Super Micro Computer (Supermicro), up 7% on February 18, 2025, have ridden the AI wave by supplying servers for AI workloads. Intel’s late rally that day tied to its AI chip ambitions shows broader sector momentum. Even smaller players in the S&P 500—like Palantir, with its AI-driven data analytics—saw stock pops after earnings beats in early February. Tech’s share of the S&P 500 hit 32% by late 2024, per S&P Dow Jones Indices, and AI-focused firms amplify that influence. The SPDR S&P Semiconductor ETF (XSD) was up 40% in 2024, signaling how AI hardware demand lifts the tide.
