US stocks are close to record highs despite geopolitical tensions, with optimism in AI stocks.

From Yahoo Finance: 2025-06-24 06:06:00

Equities are poised for a bright future following a ceasefire in the Middle East, reducing energy price disruption risks. The S&P 500 is just 2% away from its record high, showing resilience despite tariffs and geopolitics. Systematic investors are a fading force, but optimistic AI stocks may drive the market higher.

Investors are urged not to overreact to geopolitical events, as they could be entry points for the market. Fundamental investors have not significantly increased equity exposure since April, leaving room for more risk-taking. Market forces like systematic investors, option flows, and retail traders are expected to have a significant impact on equities.

Goldman Sachs notes that market price action sees geopolitical developments as a clearing event, with more offense than defense being played. Systematic investors are a key support for markets, but are now fading, while corporates entering a buyback blackout period may impact market dynamics. Options market positioning reset after a $6.5 trillion expiry, allowing for more organic price action in equities.

Renewed optimism in artificial intelligence stocks reaching all-time highs suggests a bullish force in the market. Inflation fears are easing as oil prices decline, with President Trump’s tariff deadline looming. Second-quarter earnings will be crucial, with analysts expecting a 2.8% growth in S&P 500 earnings per share. Positive outcomes hinge on tariff pauses and potential deals.

Read more: US stocks head toward record as geopolitics fail to derail rally