Despite the U.S. government shutdown, the stock market hit all-time highs on Friday, with the S&P 500 and Dow Jones Industrial Average surging. The Russell 2000 index set a record, gold also reached a high, and the most popular U.S. bond fund is having its best year in at least five.

While Big Tech continues to drive the market, smaller stocks and a variety of investments are performing well. However, concerns about overvaluation persist. Stock prices have surged faster than profits, and the S&P 500 is near its most expensive level since the 2000 dot-com bubble.

The upcoming earnings season will be crucial for the stock market, with analysts expecting 8% growth in earnings per share from S&P 500 companies. Companies will need to forecast continued growth amidst economic uncertainty and challenges like tariffs and inflation.

The stock market’s boom has been supported by the expectation of interest rate cuts by the Federal Reserve. Lower rates stimulate borrowing and spending, making investments more attractive. Investors anticipate at least three more rate cuts, but Fed officials may need to adjust plans due to inflation exceeding targets.

The AI boom is driving optimism in the market, but its success is dependent on sustained growth and sales. AI’s potential to boost productivity and offset inflation pressures from rising debt levels globally is crucial. The market is closely tied to AI’s success, with hopes for long-term benefits driving investment decisions.

Read more at Yahoo Finance: DC’s shutdown hasn’t stopped the stock market. Here’s what may