U.S. equity markets advanced on Monday, with the Nasdaq Composite hitting a record high, driven by a surge in AI-related stocks and a significant drop in oil prices. The Dow Jones Industrial Average rose 366.19 points, or 0.71%, to 52048.83. The S&P 500 gained 114.20 points, or 1.49%, to 7764.70, and the tech-heavy Nasdaq Composite added 599.55 points, or 2.26%, to reach a record 27122.09. This marks the Nasdaq's first record close since June 2. The market rally was largely attributed to optimism surrounding potential diplomatic breakthroughs regarding the Middle East and an easing of concerns about AI development.
Oil futures tumbled $4.52, or 4.5%, to $95.78 a barrel, after President Donald Trump indicated an openness to meeting Iranian officials at the United Nations General Assembly. This potential dialogue offset the impact of ongoing attacks on Saudi Arabian infrastructure by Houthi fighters. J.D. Joyce, president of Joyce Wealth Management, noted that while the situation remains fluid, any positive indication from such a meeting is well-received by the market. Despite the fall in oil prices, the retail price of diesel touched a record high of $6.51 a gallon in the U.S., according to the AAA, leading to proposals by congressional leaders to ban U.S. exports of the fuel.
AI stocks experienced a significant boost, as fears of "extinction risk" from AI development subsided. Chipmakers were particularly strong beneficiaries. Advanced Micro Devices (AMD) surged 9.9% to $615.52, reaching a market capitalization of over $1 trillion for the first time. Intel rose 13%, and Micron gained 2.3%. Meta Platforms saw a 6.7% increase, reaching a seven-month high after Wells Fargo raised its price target. Accenture also gained 3.2% following its partnership with Anthropic, involving a $2 billion investment in AI evaluation. Anthropic, an AI firm, is planning its multi-billion dollar initial public offering in November. Additionally, Nvidia struck a deal with Einride, a Swedish autonomous-truck maker, to support increased self-driving vehicle production.
Concerns about inflation and the Federal Reserve's policy response kept Treasury yields near multiyear peaks. The yield on the two-year Treasury rose 0.009 percentage point to 4.751%, its highest close since July 1, 2024. However, the yield on the 10-year Treasury note declined 0.033 percentage point to 4.962%, dropping below the critical 5% mark, while the 30-year bond yield fell 0.031 percentage point to 5.296%. Traders are also anticipating a summit between President Trump and China's Xi Jinping later this week, which could address topics like an extension of the trade truce and AI regulation.
