Global stock markets experienced a robust rally, particularly in technology shares, driven by renewed optimism surrounding artificial intelligence. This surge was attributed to investors taking comfort in data suggesting continued expansion in AI spending, which helped alleviate concerns stemming from earlier "doomsday warnings" from AI giants that had triggered a tech sell-off the previous week. Chipmakers saw substantial gains, with Intel rising 13%, Advanced Micro Devices (AMD) surging 9.3% to reach a $1 trillion market valuation, and Micron gaining 2.3%.
Meta Platforms was a significant contributor to the tech rally, soaring 6.7% to a seven-month high after Wells Fargo raised its price target on the stock to $796 from $640. Wells Fargo cited recent model launches and early traction for Meta's Muse assistant as reasons for the increased target. Additionally, Accenture's 3.2% gain followed its partnership with Anthropic, involving a $2 billion investment in AI evaluation. Analysts like Chris Zaccarelli from Northlight Asset Management highlighted that the excitement around AI's build-out and adoption has been a key driver of corporate profit growth and stock market gains over the past few years.
The broader market also benefited from a decline in oil prices, which tumbled over 3% to an 11-day low, and a retreat in Treasury yields, with the 10-year U.S. bond yield slipping below the critical 5% mark. This fall in energy prices eased pressure on equities, providing a boost to energy-sensitive sectors such as airlines, with American and Delta both seeing marginal gains. However, investors remained cautious about the interest rate outlook, as a recent inflation pickup led the Federal Reserve to raise rates for the first time in three years, and CME's FedWatch indicated a 50% chance of another hike next month.
At 11:22 a.m. ET, the Dow Jones Industrial Average rose 259.21 points, or 0.50%, to 51,940.71. The S&P 500 added 80.65 points, or 1.05%, reaching 7,731.15, and the Nasdaq Composite gained 430.51 points, or 1.62%, closing at 26,953.06.
