The Dow Jones recovered over 400 points from the lows of the day to end with gains of 90 points. The real action continued in the AI trade, with the S&P 500 and Nasdaq outperforming the Dow. The S&P 500 ended 0.7% higher and is now within 40 points of a new record high, while the Nasdaq 100 and the Nasdaq Composite both scaled new peaks overnight.
Gains on the Nasdaq were led by SpaceX, which surged 7%, while Nvidia, Tesla, Meta shares gained over 2% each, propelling the index higher.
Wall Street continues to find buyers even as the 10-year bond yield surged to as high as 5.349% on Monday, the level last seen in April 2002. The US 30-year bond yield surged to the mark of 5.703% for the first time after May 2002. According to BMO Asset Management, yields on the 30-year note will reach 6% this month and that is “inevitable”. The last instance of the US 30-year yield reaching levels of 6% was back in 2000.
Crude oil prices though, continue to remain lower, providing some relief to sentiments on the Street. Brent Crude is on the verge of breaking below the $100 a barrel mark again after Gulf producers continued to move more oil through the Strait of Hormuz and war-damaged nations continued to rebuild capacity. Kuwait highlighted that it is now pumping oil at 75% of the pre-war capacity.
Analysts at Principal Asset Management believe that strong earnings, consumer spending and sustained AI-related investments have all kept the market intact as the street absorbs rising rates, higher energy costs and renewed inflation concerns.
While Morgan Stanley said that a drop in US stock valuations has left some areas looking attractive as earnings growth is showing few signs of warning, UBS said that equities have room to move higher over the next 6-12 months, but the path will be anything but smooth.(With inputs from agencies)