US stock markets experienced a strong rally, with the Dow Jones Industrial Average rising 366.19 points (0.71%) to 52048.83, the S&P 500 gaining 114.20 points (1.49%) to 7764.70, and the tech-heavy Nasdaq Composite adding 599.55 points (2.26%) to close at a record high of 27122.09. This marks the Nasdaq's first record close since June 2. The surge was largely attributed to a renewed interest in artificial intelligence (AI) stocks, as fears regarding "extinction risk" among AI leaders subsided. Chipmakers, seen as major beneficiaries of data-center development, performed exceptionally well. Advanced Micro Devices (AMD) specifically saw a 9.9% increase, reaching $615.52 and surpassing $1 trillion in market capitalization for the first time.
Oil prices significantly declined, with futures falling $4.52 (4.5%) to $95.78 a barrel. This drop was influenced by President Donald Trump's indication of openness to meeting Iranian officials at the United Nations General Assembly, which overshadowed the impact of Houthi attacks on Saudi Arabian infrastructure. The retail price of diesel, however, hit a record average of $6.51 a gallon in the U.S., leading congressional leaders to propose a ban on U.S. exports of the fuel. In corporate news, Warner Bros Discovery shares jumped 11% to $30.80 after reports of Paramount reaching an antitrust settlement, clearing the way for an $81 billion acquisition that would unite the two studios. Paramount's stock also rose 8.5% on the news.
Treasury yields remained near multiyear peaks due to inflation concerns and potential policy responses. The two-year Treasury yield rose 0.009 percentage point to 4.751%, its highest close since July 1, 2024. Conversely, the 10-year Treasury note yield declined 0.033 percentage point to 4.962%, and the 30-year bond yield fell 0.031 percentage point to 5.296%. Despite some easing, investors remain wary of the interest-rate outlook, with markets seeing a 50% chance of another rate hike next month after the Federal Reserve's recent increase. Chicago Fed President Austan Goolsbee reiterated the need for higher interest rates, citing demand-driven inflation.
Further AI developments include Anthropic's planned multibillion-dollar initial public offering in November, later than initially expected, reflecting a recent call for a slowdown in AI development. Nvidia also struck a deal with Swedish autonomous-truck maker Einride to support increased self-driving vehicle production. The Trump administration proposed a $5 billion fund to assist Middle Eastern countries in rebuilding energy infrastructure damaged by the Iran war, aiming to reduce their dependence on the Strait of Hormuz for oil and gas transport.
