US Stock Indices Hit Records on June 02 as AI Demand Offsets Geopolitical Risk

The Dow Jones rose 0.3% on June 02 while the S&P 500 fell 0.2% and Nasdaq dropped 0.5%, reflecting a split between industrial strength and tech weakness. This comes after all three indices set record closes on June 01 on AI-driven earnings optimism. Geopolitical tensions between the US and Iran are now testing whether AI fundamentals can sustain the rally.

Record Closes Driven by AI Earnings

On June 01, the Dow rose 0.09%, the S&P 500 gained 0.26%, and the Nasdaq climbed 0.42%, all closing at all-time highs. Goldman Sachs raised its end-of-year S&P 500 target to 8,000, well above the current 7,600 level. UBS Global Wealth Management noted that AI beneficiaries are set to drive about half of S&P 500 earnings growth for 2026, even with weakened consumer spending. The Nasdaq has risen 16.5% year to date on this momentum.

Tech Weakness Offsets Industrial Gains on June 02

On June 02, Alphabet announced an $80 billion equity raise to fund AI expansion, and its stock fell 4% on the news. The Nasdaq Composite declined 0.5% as tech weakness ran up against Middle East uncertainty. Meanwhile, the Dow outperformed with a 0.3% gain, suggesting investors rotated into industrial and defensive stocks. Meyka rates all three indices at C+ with a HOLD suggestion, reflecting overbought technical conditions.

Oil Prices Swing on Geopolitical Headlines

Oil prices fell sharply on June 02 after news that Israel and Hezbollah negotiated a tentative ceasefire in Beirut, and President Trump said talks with Iran were progressing. Brent crude fell 0.3% to $94.60 a barrel, while West Texas Intermediate dropped below $92. Earlier in the week, oil had spiked after Iran suspended peace talks, but Trump’s comments about a ceasefire pared those gains. Energy weakness pressured overall market sentiment.

Technical Signals Show Overbought Conditions

The S&P 500’s RSI stands at 74.85, indicating overbought conditions, while the Nasdaq’s RSI is at 75.27. The Dow’s RSI is at 69.08. All three indices show strong uptrends with ADX readings above 20, but momentum indicators suggest limited room for further gains in the near term. Meyka’s 12-month price target for the S&P 500 is 7,250.83, implying 4.6% downside from current levels.

Final Thoughts

The US stock market remains split between AI strength and geopolitical caution. With Meyka rating all three indices at C+ and technical indicators flashing overbought signals, investors should watch for profit-taking if Middle East tensions escalate further.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.