S&P 500 Sets Its First Record Since August as AI Rally Broadens Beyond Tech

The S&P 500 climbed 0.6% on Tuesday to close at a fresh all-time high of 7,819.04, according to Barron’s — the benchmark index’s first record close since August, breaking a two-month drought that had tested the patience of Wall Street bulls.

The Nasdaq Composite added 0.5% to finish at its own record, its second consecutive record-setting trading day, while the Dow Jones Industrial Average gained about half a percent, adding 253 points. Reuters reported the index touched 7,817.13 intraday, moving past the previous intraday record of 7,816.7 set on August 13.

What made Tuesday unusual was where the gains came from. The top-performing sector of the S&P 500 was not technology — it was utilities, an oddity that has occurred only twice before since 1990 on the 61 occasions when the index notched its first record in more than 30 days. Tech landed squarely in the middle of the pack.

The utilities surge was driven by the market’s latest obsession: powering the artificial-intelligence boom. Constellation Energy jumped around 15% — the day’s top S&P 500 performer — after Alphabet agreed to a 20-year deal to buy 890 megawatts of nuclear energy from the company, Barron’s reported. Reuters data put the gain at 12.9% on news of a 3,590-megawatt power arrangement between Google and Constellation. Vistra Corp. surged 11.3% to $161.27 after announcing a financing agreement with the US government, a deal tied to the nationwide build-out of power-hungry AI data centres and White House initiatives to revive the nuclear industry, according to Investors.com.

Traditional AI names still pulled their weight: Nvidia closed at its second consecutive record high, and the tech sector advanced even if it did not lead. About nine of the eleven S&P 500 sectors finished higher, with healthcare joining utilities among the day’s leaders.

The rally also drew support from calmer bond and oil markets. The 10-year Treasury yield pulled back to 5.26% after setting another 24-year high of 5.31% on Monday, while oil prices eased more than 2% on resilient Middle Eastern crude exports and a G7 emergency stockpile release, easing inflation fears that had kept investors on edge. The Wall Street Journal noted that analysts expect S&P 500 earnings to jump more than 30% year on year this quarter, fuelled largely by AI-related stocks, according to LSEG data.

The record run comes ahead of the third-quarter earnings season, which begins next week, and extends a bull market that started in October 2022.

Why It Matters: The AI Trade Grows a Power Cord

Tuesday’s session matters less for the record itself than for how it happened. For months, this rally has been powered by a narrow cast of technology giants, leaving strategists nervous about a lopsided market. In fact, the Wall Street Journal reported that over the past month, tech and communications are up the most while seven of the other eight S&P sectors are down — “clearly, this is not indicative of a healthy bull market,” wrote Trade Nation’s David Morrison.

Tuesday pushed back on that narrative. When utilities — the market’s traditionally dullest corner — lead a record-setting day, it signals the AI story is maturing from a pure technology bet into an infrastructure story. Data centres consume enormous amounts of electricity, and investors are now pricing in a future where nuclear plants and power grids are as central to the AI build-out as chips and servers. The Alphabet-Constellation and Vistra-government deals are the clearest evidence yet that Big Tech and Washington alike are racing to lock in power supply.

There are reasons for caution. Glenmede strategist Jason Pride told Barron’s he saw no clear fundamental catalyst for Tuesday’s gains, suggesting sentiment — rather than new earnings — drove the move. And the market’s dependence on lofty AI expectations makes it vulnerable: if next week’s earnings fail to justify the spending, the same breadth that powered Tuesday could reverse quickly.

The key test comes with earnings season. If corporate results confirm the 30%-plus earnings growth analysts project, the rally broadens on substance. If not, Tuesday’s record may look like the top of a hype cycle rather than the start of something healthier. Watch the power companies as much as the chipmakers — they have quietly become the AI trade’s newest tell.

Sources

• Barron’s live market coverage — S&P 500 record and utilities sector breakdown: https://www.barrons.com/livecoverage/stock-market-news-today-100626/card/s-p-500-breaks-out-to-record-high-as-ai-rally-broadens-beyond-tech-iY6UFwQNi4cFGTS2dPZI
• The Wall Street Journal — market drivers and analyst earnings expectations: https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-10-06-2026/card/s-p-on-track-to-hit-new-record-high-z0FL7jDFYfMGYt4iWNGu
• Investors.com — Vistra, Constellation and NRG nuclear stock rally details: https://www.investors.com/news/vistra-stock-pops-4-billion-fed-financing-nuclear-stocks-rally/