Stocks held steady following a rally in artificial intelligence-related companies, as declining oil prices helped set the market tone. Investors are closely monitoring diplomatic efforts to end the US-Iran conflict, with reports suggesting Iran proposed reopening the Strait of Hormuz if the US blockade is lifted. This led to Brent crude erasing gains of as much as 2% to fall toward $98 a barrel, while West Texas Intermediate crude fell 2.6% to $93.28 a barrel. The S&P 500 futures were flat after an advance in tech giants and chipmakers drove the index to a one-month high.
The renewed decline in oil prices eased concerns about inflationary risks from elevated energy costs. Treasury yields turned lower, with the 10-year rate down two basis points to 4.93%. The dollar remained largely unchanged. David Kruk, head of trading at La Financiere de l'Echiquier, noted that no one is shorting tech and AI before the third-quarter earnings season and that there is hope for lower oil prices before midterms, suggesting slight market consolidation.
The swings in market sentiment after Monday's rally underscored the vulnerability of confidence in the AI trade to macroeconomic risks. Bond yields remain near their highest levels in years despite easing this week, as traders continue to price in imminent interest-rate hikes and persistent fiscal shortfalls. However, some analysts believe US equities are set for a rally, citing falling energy prices, the success of Meta's new Muse AI app, and the conclusion of major central bank meetings.
SoftBank Group Corp. has attracted over $20 billion in preliminary demand for what is shaping up to be a significant junk bond offering. In other market movements, Nasdaq 100 futures rose 0.1%, Dow Jones Industrial Average futures rose 0.3%, and the Stoxx Europe 600 rose 0.5%. Bitcoin fell 1.2% to $85,903.54, and Ether fell 1.5% to $2,742.14. Spot gold fell 0.5% to $4,321.83 an ounce.
