Stocks generally held steady, with a notable rally in artificial intelligence (AI) stocks. This momentum was largely fueled by a positive reception for Meta Platforms Inc.'s new AI agent. Microsoft Corp. rose 0.9% in premarket trading, leading gains among the Magnificent Seven, while an exchange-traded fund tracking chipmakers saw a slight decrease. Analysts anticipate continued strength in the tech and AI sectors before the third-quarter earnings season begins.
Oil prices experienced a significant reversal, with Brent crude erasing gains of up to 2% to fall toward $98 a barrel. West Texas Intermediate (WTI) crude fell 2.6% to $93.28 a barrel. This decline was attributed to reports from Japan's Kyodo News Agency that Iran proposed reopening the Strait of Hormuz within seven days if the U.S. blockade is lifted, alongside Saudi Arabia's plans to resume operations on its East-West pipeline. The softening oil prices helped alleviate concerns about inflationary risks.
The decline in oil prices also contributed to a decrease in Treasury yields. The 10-year Treasury rate dropped two basis points to 4.93%. Similarly, Germany's 10-year yield declined three basis points to 3.43%, and Britain's 10-year yield fell three basis points to 5.18%. The dollar remained largely stable despite these movements. These shifts reflect investor hopes for diplomatic progress in the Middle East, potentially lowering oil prices ahead of U.S. midterm elections.
Asian markets also saw gains, with technology stocks leading the way. MSCI's broadest index of Asia-Pacific shares outside Japan rose over 1%, and South Korean stocks jumped nearly 2%. Taiwan shares were 1.3% higher. SoftBank Group Corp. has garnered over $20 billion in preliminary demand for a large junk bond deal. Other corporate news includes Alibaba Group Holding Ltd. rolling out its new AI chip to compete with Nvidia Corp., and On Holding AG's plans to increase constant currency sales through 2029.
