The S&P 500 and Nasdaq closed at a record high after a rally around AI chipmakers and a dip in US treasury yields.

At market’s close, the S&P 500 was up 0.58%, topping 7,800 for the first time in its history. The tech-heavy Nasdaq index rose 0.45%, while the Dow, which is slightly down from its record high in August, climbed 0.49%.

Investors appeared optimistic after recent developments for chipmakers including Marvell Technology, Advanced Micro Devices and Broadcom that showed growth in the markets for the chips used to power AI.

Wall Street has also grown more optimistic that the US Federal Reserve will leave interest rates unchanged at its next board meeting in October. Job figures from September showed underwhelming growth in the labor market, and multiple Fed officials have said the next interest rate increase can probably wait.

The optimism in the stock market, largely coming from continuing investment in AI, has defied other signs of instability in the US economy and global politics.

The US bond market, typically seen as one of the safest investment vehicles, has been in turmoil in recent weeks. US bond yields, or the return an investor receives when a bond matures, reached recent highs amid concerns over high inflation and interest rates. The yield for 10-year US treasury bonds on Monday reached 5.349%, the highest since April 2022, before dipping back down on Tuesday.

For American consumers, higher energy prices continue to be a major pain point. While gas prices have dipped over the last week, prices are still about $1.20 a gallon on average higher than a year ago. Diesel, which is used to fuel trucks, buses and trains, has also gone down from record high but is still over 40% higher than a year ago.

The economy is expected to be a top issue in the upcoming midterm elections, with many voters expressing frustration over high prices. Donald Trump, who has been stumping for Republican candidates across the country, has been trying to paint a different picture for voters.

At a rally in Nebraska on Monday night, Trump said that “our nation is doing better now than it’s ever done” and that gas prices would fall below $1.85 a gallon “in no time”.