European stocks rose close to record highs, extending their gains over the U.S. market. According to Sina Finance, the Stoxx Europe 600 closed 0.3% higher at 658.32, just below its record closing high of 660.51 set in August. Since early October, the index has gained 3.9%, while the S&P 500 has fallen 2%. Before the release of higher-than-expected U.S. October inflation data, European shares briefly rose above the August record. Core CPI, excluding food and energy, increased 0.3% month over month, above the median estimate of 0.2%.

Investors have favored more defensive European assets in recent weeks amid unease sparked by technology stocks and a sell-off in AI-related shares after last week’s midterm elections. Falling oil prices also supported European stocks. Karen Georges, an equity fund manager at Paris-based Ecofi, said funds were rotating from AI trades into other sectors, including banks and utilities, making Europe a major beneficiary and bringing inflows to the market. She added that record highs were driven by strong corporate earnings rather than high valuations, with price-to-earnings ratios generally around historical averages.

Bank and industrial shares were among the main drivers of Tuesday’s gains, while the technology sector received a boost from Infineon Technologies’ optimistic outlook. The chipmaker raised its 2027 sales forecast for its data-center business, indicating its belief that the business would continue to drive growth despite mounting concerns about the AI boom. Investors are now focused on AI giant Anthropic PBC, which is beginning to market its initial public offering in the United States.