NEW YORK, New York - A surge in AI stocks took U.S. stock markets to new record highs on Monday with all the major indices notching up significan gains, adding to those achieved during the rally a day earlier, which followed the weekend' coup in  Venezuela.

"Tech kind of took a pause at the back end of the year, but I don't think anyone questions that AI is a game changing technology," Ross Mayfield, investment strategist at Baird told CNBC Tuesday. "We're seeing the chip stocks lead. That's probably to be expected, but that cyclical rotation is still continuing."

"You can have the AI trade and tech stocks work and the other cyclical components of the market work as well," Mayfield said. "That's the kind of thing you might expect in an economy that is going to be running hot in 2026 with rate cuts, tons of fiscal stimulus and an AI enthusiasm that's getting closer and closer to a fever pitch."

The Dow Jones Industrial Average led the charge Tuesday, posting a substantial gain of 484.90 points, or 0.99 percent, to close at a record 49,462.08. The blue-chip index's performance underscored strong investor confidence in the economic outlook.

The Standard and Poor's 500 also set a new closing record, advancing 42.76 points, or 0.62 percent, to finish at 6,944.81. The benchmark index's climb was supported by gains across multiple sectors.

Technology stocks contributed to the positive momentum, with the NASDAQ Composite rising 151.35 points, or 0.65 percent, to end the session at 23,547.17.

U.S. Dollar Gains Broad Ground in Tuesday Trading Amid Risk Aversion

The U.S. dollar rallied against most major counterparts in Tuesday's foreign exchange session, supported by its safe-haven appeal amid shifting market sentiment.

The euro fell notably against the greenback, with EUR/USD declining 0.25 percent to trade at 1.1692. The British pound also softened, as GBP/USD dropped 0.28 percent to 1.3503.

The dollar's strength was evident across several key pairs. USD/JPY rose 0.16 percent to 156.58, continuing its recent upward trajectory. The dollar also advanced against the Canadian dollar, with USD/CAD gaining 0.27 percent to 1.3804. A significant move was seen in USD/CHF, which climbed 0.50 percent to 0.7952, indicating broad-based dollar demand.

The commodity-linked Australian dollar was a rare counter-trend mover, as AUD/USD managed a gain of 0.41 percent to 0.6741. The New Zealand dollar was nearly flat, with NZD/USD inching down a marginal 0.03 percent to 0.5786.

Analysts cited a recalibration of interest rate expectations and a cautious tone in equity markets as drivers behind the dollar's broad rally, which positioned it as the day's clear outperformer in the G10 currency space.

Global Markets Mostly Higher on Tuesday; European and Asian Indices Lead Gains

Global equity markets closed mostly higher on Tuesday, with European and Asian indices posting strong gains, while a few major benchmarks in the Asia-Pacific region bucked the trend with modest losses.

Canada's main benchmark joined the global. The S&P/TSX Composite index gained 187.07 points, or 0.58 percent, closing at 32,407.02, as strength in materials and financial shares provided a lift.

The UK's FTSE 100 surged, closing at 10,122.73, a gain of 118.16 points or 1.18 percent.

In Europe, the rally was broad-based. Germany's DAX edged up 0.09 percent to 24,892.20, and iin France the CAC 40 advanced 0.32 percent to 8,237.43.

The pan-European EURO STOXX 50 rose 0.14 percent to 5,931.79. Belgium's BEL 20 was a standout performer, jumping 1.64 percent to 5,182.87.

Asian markets also finished strongly. Hong Kong's Hang Seng Index climbed 1.38 percent to 26,710.45. In Singapore Tuesday, the STI gained 1.27 percent, closing at 4,739.97.

In Japan the Nikkei 225 continued its strong run, adding 1.32 percent to close at 52,518.08. Mainland China's SSE Composite rose 1.50 percent to 4,083.67.

South Korea's KOSPI rallied 1.52 percent to 4,525.48, and Taiwan's TWII soared 1.57 percent to 30,576.30.

Other notable gainers included Indonesia's IDX Composite, up 0.84 percent, New Zealand's NZ 50, up 0.56 percent, and Israel's TA-125, which led the Mideast region with a 2.55 percent surge. Egypt's EGX 30 also posted a significant gain of 2.13 percent.

The session was not uniformly positive, however. Australia's S&P/ASX 200 dipped 0.52 percent to 8,682.80, and the broader All Ordinaries fell 0.42 percent. India's BSE Sensex retreated 0.44 percent to 85,063.34, and in Malaysia the FTSE Bursa Malaysia KLCI declined 0.47 percent.

The mixed but largely positive performance Tuesday reflected cautious optimism among investors, with European markets showing resilience and several Asian indices building on recent momentum.

(This report incorporates quotes retrieved with the assistance of artificial intelligence).

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