Wall Street ended higher on Tuesday, as chip stocks surged on renewed AI optimism, Moderna rallied and the Dow Jones Industrial Average reached a record high.

Moderna jumped almost 11 percent after BofA Global Research raised its price target on the drugmaker.

Memory and storage technology stocks rallied after Nvidia CEO Jensen Huang, speaking at the Consumer Electronics Show in Las Vegas, gave details about upcoming AI processors that include a new layer of storage technology.

SanDisk jumped over 27 percent, Western Digital rallied 17 percent, Seagate Technology gained 14 percent and Micron Technology rose 10 percent, with all four stocks hitting record highs.

The PHLX chip index also hit an all-time high, up 2.75 percent for the day and bringing its gain in the first three trading sessions of 2026 to about ⁠8 percent.

"I think we're going to have a very strong earnings season for Big Tech, and all those capex estimates that we hear about are going to be revised higher again," said Jed Ellerbroek, portfolio manager at Argent Capital in St Louis.

Investors are looking forward to reliable economic data as the effects of a record 43-day federal government shutdown wear off.

Weaker-than-expected employment data could strengthen the case for central bank interest rate cuts.

Heading into fourth-quarter earnings season in the next few weeks, valuations on Wall Street remain relatively pricey.

The S&P 500 is trading at about 22 times expected earnings, down from 23 in November, but above the index's five-year average of 19, according to LSEG data.

The S&P 500 climbed 0.62 percent to end the session at 6,944 points. The Nasdaq gained 0.7 percent to 23,547, while the Dow Jones Industrial Average rose 1 percent to 49,462 points, nearing the historic 50,000 mark.

Investors brushed aside fears of broader geopolitical fallout after US forces captured Venezuelan President Nicolas Maduro over the weekend, betting the move could pave the way for US firms to gain access to Venezuela's oil reserves.

Oil stocks dipped after robust gains in the prior session, with giants Exxon Mobil and Chevron losing 3.4 percent and 4.5 percent, respectively. (Reuters)