U.S. stocks saw a significant rally on Monday, with the Nasdaq Composite reaching a new record closing high, its first since June 2. The S&P 500 also gained, nearing its own record, while the Dow Jones Industrial Average closed higher. This surge was primarily fueled by strong performances in the technology sector, particularly chipmakers, amid renewed investor confidence in continued AI spending despite recent safety warnings from AI industry leaders.
Key drivers of the market's performance included a substantial rally in chip stocks. Intel and Arm Holdings both saw gains over 12%, and the PHLX semiconductor index jumped 4.3%. Advanced Micro Devices (AMD) closed 10% higher, reaching a market capitalization of $1 trillion for the first time. Other notable movers included Meta Platforms, whose shares soared 11.4% after Wells Fargo increased its price target following the launch of its Muse AI assistant, and Warner Bros Discovery, which rose 11% on news of a potential antitrust settlement for Paramount.
Adding to the positive sentiment were falling oil prices and retreating long-dated Treasury yields. U.S. crude fell 4.86% to $95.43 a barrel, and Brent crude dropped to $100.11 per barrel, an 11-day low, on speculation of a potential breakthrough in Middle East talks involving the U.S. and Iran. The benchmark 10-year U.S. Treasury yield fell 4.5 basis points to 4.951%, dropping below the psychologically important 5% level. Despite rising interest-rate-sensitive two-year U.S. Treasury yields to 4.751%, and expectations of further global rate hikes, equities remained near record highs, supported by strong earnings growth, according to Seema Shah, chief global strategist at Principal Asset Management.
The Nasdaq Composite rose 2.26% to 27122.09, the S&P 500 gained 1.49% to 7764.70, and the Dow Jones Industrial Average ended up 0.71% at 52048.83. Volume on U.S. exchanges was relatively strong, with 16.5 billion shares traded. Investors continue to eye central bank actions, with futures indicating a 55% chance of another Federal Reserve rate hike in October and 91% by year-end.
