Data center construction and AI-driven earnings are shielding the U.S. economy from the typical recessionary effects of rising interest rates, keeping the S&P 500 resilient.
The S&P 500 climbed 0.9% despite persistent inflation and rising bond yields, as massive data center construction projects insulate the labor market from traditional rate-hike impacts. While higher borrowing costs pressure consumers, robust AI-driven corporate earnings and capital-intensive tech spending continue to sustain economic growth and market momentum.
The construction sector, typically the first to suffer during rate hikes, remains insulated because tech firms are prioritizing data center builds regardless of borrowing costs.
While the economy remains resilient, risks include persistently high energy costs and the potential for the data center construction boom to taper off once projects are completed.