S&P 500 hits all-time high on AI bets as oil drops: Markets wrap

A pullback in oil prices sent stocks to all-time highs, with Wall Street also buoyed by renewed enthusiasm about the artificial-intelligence trade that has powered the bull market.

The advance in equities extended into a fourth straight day, driving the S&P 500 toward its first record close since August. Nvidia Corp.’s market value approached $6 trillion. Advanced Micro Devices Inc.’s Lisa Su predicted “very high” chip demand over the next few years. A drop in Brent crude to $98 eased inflation anxiety, bringing some relief to Treasuries.

Equities have held up well and volatility remains contained despite risks from energy costs and interest rates. While the narrative remains captured by bets on the path for monetary policy and geopolitical developments, a less discussed factor is the strong earnings expectations, said Kyle Rodda at Capital.com.

The US economy remains supportive of corporate revenues and profits, according to Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.

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“We retain strong conviction in the AI growth story, and believe AI-related investment remains a powerful tailwind for the broader equity market,” she noted. “A favourable growth environment and robust earnings suggest profit growth can broaden beyond technology.”

Equities have historically weathered rising-rate periods when the economy and profits kept growing, according to Anthony Saglimbene at Ameriprise.

“In our view, stocks have room to move higher if the 2027 outlook for growth and profits remains firm, energy prices stabilize/fall, and the Fed signals its rate-hiking path will be short-lived,” he said. “Of course, any advance in stock prices through year-end will likely require a steady AI trade as well.”

As geopolitical fragmentation continues, most major economies are absorbing higher energy prices and tariffs better than expected, according to Tiffany Wilding and Andrew Balls at Pacific Investment Management Co.

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“In our baseline, we expect global growth to remain resilient over our six- to 12-month cyclical horizon while inflation moderates,” they added. “A booming AI investment cycle, the ability of consumers and China to absorb higher costs, and an incremental approach by central banks may help support growth while containing inflation.”

Corporate highlights:

Paramount Skydance Corp. closed its $110 billion acquisition of Warner Bros. Discovery Inc. on Tuesday, completing one of the biggest media mergers of all time after engaging in a bruising battle for control with Netflix Inc. and fending off antitrust lawsuits.
Google parent Alphabet Inc. agreed to buy nuclear power from Constellation Energy Corp. in a deal that will spur the addition of 890 megawatts of new reactor capacity. The power producer’s stock soared.
Anthropic PBC’s Mythos artificial-intelligence model has dramatically increased global cybersecurity risks, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said.
OpenAI is in talks with multiple investment funds from the United Arab Emirates, including Abu Dhabi-based MGX, to help anchor a $30 billion round of financing for the ChatGPT maker, according to people familiar with the matter.
Moonshot AI has closed the final round of private fundraising at a valuation of about $50 billion and is heading toward an initial public offering in Hong Kong in the first quarter of next year, according to people familiar with the matter.

Some of the main moves in markets:

Stocks

The S&P 500 rose 0.7% as of 10:01 a.m. New York time
The Nasdaq 100 rose 0.7%
The Dow Jones Industrial Average rose 0.7%
The Stoxx Europe 600 rose 0.4%
The MSCI World Index rose 0.7%

Currencies

The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.1252
The British pound rose 0.3% to $1.3268
The Japanese yen fell 0.1% to 158.09 per dollar

Cryptocurrencies

Bitcoin rose 0.6% to $86,264.6
Ether was little changed at $2,713.47

Bonds

The yield on 10-year Treasuries was little changed at 5.30%
Germany’s 10-year yield was little changed at 3.49%
Britain’s 10-year yield declined two basis points to 5.40%

Commodities

West Texas Intermediate crude fell 1.6% to $88.02 a barrel
Spot gold rose 0.4% to $4 154.71 an ounce

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