The Nasdaq Composite surged 2.26% to reach a record closing high for the first time since June 2, driven by a rally in artificial intelligence-related stocks. The S&P 500 also gained 1.49%, nearly reaching its own record. The Dow Jones Industrial Average closed up 0.71%.
Chip stocks were a major catalyst, with Advanced Micro Devices (AMD) soaring 10% to achieve a market capitalization of $1 trillion for the first time. Intel and Arm Holdings both saw gains exceeding 12%, contributing to a 4.3% jump in the PHLX semiconductor index. This strong performance in AI-linked companies signals renewed investor optimism in the sector.
Market sentiment was further supported by declining oil prices and falling long-dated Treasury yields. US crude oil fell 4.86% to $95.43 a barrel, and Brent crude dropped 3.62% to $100.11 per barrel. Benchmark 10-year Treasury yields decreased by 4.5 basis points to 4.951%. However, interest-rate-sensitive two-year US Treasury yields rose 0.75 of a basis point to 4.751%, reaching an earlier high of 4.772%, the highest since July 2024.
Analysts noted that the retreat in oil prices and Treasury yields shifted from being headwinds to tailwinds for the market. Traders are also hopeful that ongoing diplomatic efforts to address Middle East tensions, particularly between the US and Iran, could further stabilize oil prices. Despite the recent rally, some caution remains regarding macroeconomic risks and potential interest rate hikes, with traders seeing a 50% chance of another hike next month, according to CME's FedWatch.
