US stocks held near record levels on Tuesday as investors weighed the durability of the market’s rally against looming policy and political risks.
Investors await Federal Reserve Chair Jerome Powell’s speech later in the day for further policy cues.
The S&P 500 and Nasdaq Composite hovered around the flatline, while the Dow Jones Industrial Average edged higher by 113 points, or 0.2%, marking another all-time high.
The move followed Monday’s session, when all three major averages set fresh intraday and closing records, extending the S&P 500’s winning streak to three days.
Nvidia was a key driver, with shares climbing nearly 4% after announcing plans to invest $100 billion in OpenAI to build out advanced data centers.
Despite the momentum, questions are building over whether the AI trade can sustain current valuations.
Friday’s release of the Fed’s preferred inflation gauge, the personal consumption expenditures price index, is expected to provide fresh signals on the trajectory of monetary policy into year-end.
Meanwhile, political uncertainty looms as the Sept. 30 deadline to avoid a government shutdown approaches.
The Senate last week rejected both Republican and Democratic stopgap funding proposals, raising the risk of a prolonged standoff.
While markets have historically looked past shutdowns, analysts warn this episode could weigh more heavily given the weakest economic backdrop in over two decades.
US growth projection lifted
The OECD on Tuesday raised its global growth outlook, citing resilience across several economies despite heightened trade frictions and policy uncertainty.
The organisation now projects global GDP to expand 3.2% in 2025, up from its June estimate of 2.9%.
That would still mark a slight slowdown from 2024’s 3.3% pace, while expectations for 2026 remain at 2.9%.
The US forecast was lifted modestly to 1.8% growth in 2025, compared with 1.6% predicted earlier, though still down sharply from the 2.8% expansion recorded in 2024.
Growth is projected to ease further to 1.5% in 2026.
The report highlighted emerging markets as an area of unexpected strength, offsetting some of the drag from advanced economies.
At the same time, the OECD cautioned that risks to the outlook remain elevated. It pointed to weaker investment and global trade flows, strained further by sweeping US tariffs.
Duties of up to 50% on imports came into force in August following months of policy reversals and temporary suspensions under President Donald Trump’s administration.
Governments worldwide are still negotiating frameworks to limit the fallout, but uncertainty over trade rules continues to weigh on sentiment.
The report underscores the dual reality of the global economy: firmer-than-expected momentum in the near term, but mounting structural challenges that could weigh on growth in the years ahead.
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