US stocks experienced a significant rally, driven by a decline in oil futures and a resurgence of investor confidence in artificial intelligence. The Dow Jones Industrial Average increased by 366.19 points, or 0.71%, closing at 52048.83. The S&P 500 gained 114.20 points, or 1.49%, reaching 7764.70, while the tech-heavy Nasdaq Composite soared 599.55 points, or 2.26%, to a record high of 27122.09. This was the Nasdaq's first record close since June 2, reflecting renewed bullish sentiment.
Oil prices tumbled as hopes of a resumption in US-Iran negotiations emerged. Crude futures fell by $4.52, or 4.5%, settling at $95.78 a barrel. Brent crude also dropped, falling 3.4% to $100.34, reaching its lowest level since September 9. President Donald Trump's openness to meeting Iranian officials at the United Nations General Assembly helped alleviate market concerns, despite ongoing attacks on Saudi Arabian infrastructure by Houthi fighters. Meanwhile, the retail price of diesel in the US reached a record high of $6.51 per gallon, according to the American Automobile Association (AAA), prompting congressional leaders to propose a ban on US fuel exports.
The AI sector saw a strong rebound, with investors returning to bets on a prolonged AI boom as fears about "extinction risk" subsided. Chipmakers, seen as major beneficiaries of data-center development, performed particularly well. Advanced Micro Devices (AMD) surged 9.9% to $615.52, pushing its market capitalization above $1 trillion for the first time. Intel rose 12.2%, and Arm Holdings gained 17%. Meta shares also soared 11.4% after Wells Fargo increased its price target following the launch of its Muse AI assistant. Anthropic, however, plans its multibillion-dollar initial public offering in November, later than many investors anticipated.
Treasury yields remained near multiyear peaks due to inflation concerns and potential policy responses. The yield on the two-year Treasury increased by 0.009 percentage points to 4.751%, its highest close since July 1, 2024. Conversely, the yield on the 10-year Treasury note declined by 0.033 percentage points to 4.962%, falling below the psychologically significant 5% level. The 30-year bond yield also fell by 0.031 percentage points to 5.296%. These movements reflected a shift from bond market headwinds to tailwinds, as noted by market strategists.
In corporate news, shares of Warner Bros Discovery rose 11% to $30.80, marking its largest gain in nearly a year. This followed reports that Paramount reached an antitrust settlement with 12 state attorneys general, paving the way for an $81 billion acquisition that would merge the two Hollywood studios. Under the settlement, Paramount is expected to retain control of cable channels and commit to investing in domestic studios and production. Separately, the Trump administration proposed investing $5 billion in a new fund to help Middle Eastern countries rebuild energy infrastructure damaged by the Iran war and reduce reliance on the Strait of Hormuz.
