The Nasdaq Composite surged 2.26% to a record closing high of 27,122.09 on Monday, its first record close since June 2. This rally was largely fueled by strong gains in chipmakers, with the PHLX semiconductor index jumping 4.3%. Advanced Micro Devices led the charge, closing 10% higher and achieving a market capitalization of $1 trillion for the first time. Intel and Arm Holdings also saw significant increases, surging over 12% and 17% respectively. This renewed optimism in AI stocks came despite recent safety warnings from AI industry leaders that had previously triggered a global tech selloff.
The broader market also saw gains, with the S&P 500 rising 1.49% to 7764.70, just shy of its own record, and the Dow Jones Industrial Average ending up 0.71% at 52048.83. This positive sentiment occurred even amidst growing expectations of further global interest rate hikes, with the Federal Reserve potentially raising rates again in October (55% chance) or by year-end (91% chance). Seema Shah, chief global strategist at Principal Asset Management, noted that equities remain near record highs, supported by strong earnings growth, and that central banks are raising rates to combat inflation rather than to slow economic activity.
Contributing to the market's positive mood were falling oil prices and declining long-dated Treasury yields. U.S. crude oil fell 4.86% to $95.43 a barrel, and Brent crude dropped 3.62% to $100.11 per barrel. This decline in oil prices was attributed to profit-taking, hopes for constructive discussions at the UN General Assembly, and the anticipation of a meeting between President Trump and Chinese President Xi. Additionally, the benchmark 10-year Treasury yields fell 4.5 basis points to 4.951%, easing market pressures, although interest-rate-sensitive two-year U.S. Treasury yields rose 0.75 of a basis point to 4.751%, reaching their highest since July 2024.
