Global stocks rallied, with MSCI's All-World index climbing 0.3% and European shares gaining 0.75%, propelled by a resurgence in AI optimism. This uplift followed a week of investor concern over rising interest rates and high oil prices, which had led to a six-week bond market selloff. Futures for the Nasdaq rose almost 1%, and chipmakers saw significant gains, with Intel up 5.4%, and Micron and AMD each rising around 2% in premarket trading. The tech-heavy Nasdaq Composite ultimately surged 2.26% to 27,122.09 points, achieving a record-high close, while the S&P 500 advanced 1.49% to 7,764.70 points, bringing it within 0.4% of its August 13 record.
The renewed confidence in AI spending, despite recent safety warnings from AI giants, was a key driver. Advanced Micro Devices (AMD) increased by approximately 10%, pushing its market capitalization to $1 trillion for the first time. Intel's stock soared 12.2%, and Arm Holdings jumped 17%. Meta Platforms saw an 11.4% rise after Wells Fargo raised its price target following the launch of Meta's Muse AI assistant. The PHLX semiconductor index climbed 4.3%, highlighting the broad strength in the chip sector.
Simultaneously, oil prices retreated, easing inflationary concerns and providing a tailwind for markets. Brent crude futures fell 2% to $101.7 a barrel, dipping below the $100 mark for the first time since September 9, reaching an 11-day low. This decline in oil prices, combined with a retreat in Treasury yields, turned previous market headwinds into tailwinds, according to Art Hogan, chief market strategist at B. Riley Wealth. The benchmark US 10-year yield fell below the psychologically important 5% level.
The rally extended beyond the US, with Asian markets also showing strength; South Korea's Kospi rose 1.7%, and Taiwan's Taiex increased 1.4%. The positive sentiment was linked to the success of Meta's new AI agent, Muse, which topped download charts. Chris Beauchamp, IG chief market strategist, noted that while oil prices saw a minor correction, the overall direction of travel for oil is still higher, but the immediate easing provided relief to bond markets, which had been hit hard by high interest rates and inflation concerns, with the average 10-year yield for G7 economies reaching its highest since 2008 at 4.2%.
