NEW YORK: The main US stock indexes advanced on Monday, powered by gains in AI firms, as Treasury yields eased and crude prices tumbled more than 3 percent to hit an 11-day low on the prospect of a breakthrough in Middle East talks at a UN meeting this week.
Investors took comfort from data that suggested spending on AI was still expanding, placating concerns around doomsday warnings from the leaders of AI giants a week ago that triggered a global tech selloff.
Chip companies rallied. Intel rose 13 percent, Advanced Micro Devices surged 9.3 percent to become the latest chipmaker to reach USD1 trillion in market valuation, while Micron gained 2.3 percent.
Meta soared 6.7 percent to a more than seven-month high after brokerage Wells Fargo hiked its price target on the stock, while Accenture gained 3.2 percent after partnering with Anthropic to invest USD2 billion in AI evaluation.
“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 for Northlight Asset Management.
“Is there going to be a trade-off between safety and productivity benefits? That argument is going to continue for many months to come, if not many years.”
While Washington and Tehran continued to exchange new threats through the weekend, US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected at the UN General Assembly in New York this week.
A fall in oil prices eased the pressure on equities as the 10-year US bond yield slipped below the critical 5 percent mark. Airlines such as American and Delta, typically sensitive to energy prices,rose marginally.
Still, investors were wary of the interest-rate outlook after a recent pickup in inflation prompted the US Federal Reserve to raise rates for the first time in three years. Markets see a 50 percent chance of another hike next month, CME’s FedWatch showed.
Commentary from at least 10 central bank policymakers is due this week.
Chicago Fed President Austan Goolsbee said there was “no ambiguity” about the need for higher interest rates, with inflation pressures now moving beyond tariffs and energy prices to strong demand.