US stock markets advanced on Monday, with the Dow Jones Industrial Average rising 0.71% to 52,048.83, the S&P 500 gaining 1.49% to 7,764.70, and the Nasdaq Composite hitting a record high with a 2.26% increase to 27,122.09. This rally was fueled by renewed investor confidence in the AI sector and a significant drop in crude oil prices.
The decline in oil futures, with a $4.52 or 4.5% fall to $95.78 a barrel, was primarily attributed to President Donald Trump's stated openness to meeting Iranian officials at the United Nations General Assembly. This diplomatic overture outweighed ongoing concerns about Houthi attacks on Saudi Arabian infrastructure, leading to a "relief rally" in the markets, as noted by J.D. Joyce of Joyce Wealth Management. The US administration also proposed a $5 billion fund to rebuild energy infrastructure in the Middle East and reduce reliance on the Strait of Hormuz.
AI-related stocks saw substantial gains, as fears about "extinction risk" faded and traders returned to bets on a prolonged AI boom. Chipmakers were particularly strong performers, with Advanced Micro Devices (AMD) surging 9.9% to $615.52, reaching a market capitalization exceeding $1 trillion for the first time. Intel also rose 13% and Micron gained 2.3%. Meta Platforms saw a 6.7% increase after Wells Fargo raised its price target, and Accenture gained 3.2% after announcing a $2 billion investment in AI evaluation with Anthropic.
Treasury yields remained near multiyear peaks due to inflation concerns, though some yields eased. The yield on the two-year Treasury rose 0.009 percentage point to 4.751%, while 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%. Elsewhere, Warner Bros Discovery shares jumped 11% to $30.80 following reports of Paramount's antitrust settlement, clearing the path for an $81 billion acquisition and uniting two major Hollywood studios.
