In a landmark moment for US financial markets, the S&P 500 index briefly surged past the 7,000-point threshold for the very first time on Wednesday, 28th January 2026, before paring gains later in the trading session. This historic peak was met with exuberant celebration from former President Donald Trump, who took to his Truth Social platform to declare, "The S&P 500 just hit 7000 for the FIRST TIME EVER. AMERICA IS BACK!!!"
AI Optimism Fuels Early Market Rally
The initial push beyond the 7,000 benchmark was largely driven by renewed investor confidence in the artificial intelligence sector. Market sentiment received a significant boost from positive earnings reports released on Tuesday from key industry players. Dutch semiconductor equipment manufacturer ASML and US data storage giant Seagate Technologies both indicated robust and rising demand for AI-related technologies, assuaging fears of a near-term slowdown in the AI boom.
Susannah Streeter, chief investment strategist at Wealth Club, commented on the trend, stating, "Results like these are helping to put worries to bed about the AI boom faltering any time soon. Tech is once again setting the tone as investors bet on the AI boom continuing, fuelling the prospects for listed companies."
Big Tech Earnings in Focus
Investor attention was firmly fixed on the latest quarterly earnings reports from major technology firms, due to be released after the market's closing bell. Microsoft, Meta, and Tesla were all scheduled to report on Wednesday, with Apple following suit on Thursday. These results were seen as a potential catalyst that could either reignite the tech rally or exacerbate recent underperformance, as Big Tech stocks have trailed the broader S&P 500 index so far this year.
Kathleen Brooks, research director at XTB, noted the heightened expectations, explaining, "The options market is pricing in a big reaction for tech stocks on the back of these earnings reports. This suggests that one misstep by the Magnificent 7 could see their shares fall further behind."
Federal Reserve Decision Looms
Adding another layer of complexity to the market landscape, investors were also awaiting the latest interest rate decision from the US Federal Reserve. This meeting marks the first since President Trump's unprecedented move to launch a criminal investigation into Fed Chair Jerome Powell. While interest rates are widely expected to remain on hold, traders continue to anticipate the possibility of two rate cuts later in the year, which could provide additional momentum for the ongoing market rally.
Dollar Stages a Late Recovery
Meanwhile, the US dollar managed to claw back some ground after a period of intense selling pressure. Earlier on Wednesday, the dollar index—which measures the greenback against a basket of major global currencies—had plummeted to its lowest level in four years, hitting 95.85, a nadir not seen since February 2022.
The currency's weakness throughout 2026 has been attributed to President Trump's unpredictable foreign policy interventions and economic management strategies. This trend culminated in the dollar recording its largest single-day drop since April on Tuesday, following remarks from the President in Iowa where he appeared unconcerned about its depreciation, stating, "I think the value of the dollar – look at the business we’re doing. The dollar’s doing great."
Treasury Secretary Offers Support
Initial trading on Wednesday saw continued selling pressure on the dollar, but comments from Treasury Secretary Scott Bessent later in the day provided some much-needed support. In an interview with CNBC, Bessent reaffirmed that the United States remains committed to a "strong dollar policy." He also explicitly ruled out any intervention to bolster the Japanese yen, a move that would have further weakened the US currency.
By the close of trading in London, the dollar index had recovered slightly, trading 0.3 per cent higher at 96.50. While the S&P 500 ultimately retreated below the 7,000 mark and finished the session in negative territory, the brief breach of this psychological barrier and the subsequent political fanfare underscore the volatile and headline-driven nature of current financial markets.
