AI gains boost US stocks as oil prices fall and Treasury yields ease
Wall Street indexes rose on Monday driven by AI-related stocks, while falling oil prices and lower Treasury yields supported equity markets amid hopes for progress in Middle-East talks.
U.S. equity markets climbed on Monday as shares of artificial-intelligence companies led gains, while crude oil prices dropped more than 3% to an 11-day low and the 10-year Treasury yield slipped below 5%. The rally came after a brief sell-off triggered by recent warnings from AI industry leaders, but investors refocused on continued spending on the technology.
"The excitement in the build-out and adoption of AI has really driven a lot of the growth in corporate profits and a lot of the gains in the stock market over the past few years," said Chris Zaccarelli, chief investment officer at Northlight Asset Management. He added that the debate over safety versus productivity benefits is likely to continue for months or years.
Oil’s decline eased pressure on equities, and the lower bond yield reduced concerns about higher financing costs. Nonetheless, market participants remain cautious after the Federal Reserve’s first rate increase in three years, with CME FedWatch indicating a roughly 50% probability of another hike next month.
Chicago Fed President Austan Goolsbee said there was "no ambiguity" about the need for higher rates as inflation pressures shift from tariffs and energy to strong demand. Meanwhile, diplomatic developments, including a U.S.-Denmark agreement on Greenland and the prospect of a China-U.S. summit, added to the positive sentiment.
Advancing issues outnumbered decliners on both the NYSE and Nasdaq, with the S&P 500 posting four new 52-week highs and the Nasdaq Composite recording 30 new highs.