GLOBAL stocks rose yesterday as strong earnings from chipmakers lifted sentiment, while the dollar hovered near a one-year high, with investors remaining wary about stretched valuations.
The benchmark S&P 500 and the Nasdaq were advancing on Wall Street, led by industrials, healthcare and materials stocks. Micron was up 10 per cent after the memory chipmaker’s solid forecast helped extend its AI-driven ascent. Qualcomm rose 4pc after reporting that it expects $15 billion a year in sales from its data centre business by 2029.
The Nasdaq was down, however, pulled lower by choppy trading among most megacap technology stocks. Apple was down 5.3pc. The Dow Jones Industrial Average rose 1pc, the S&P 500 rose 0.21pc, and the Nasdaq Composite fell 0.46pc.
Investor concern that valuations of AI-related companies have become stretched after years of gains has weighed on markets in recent days, leading to volatile sessions. Furthermore, markets are pricing in higher interest rates from the US Federal Reserve and other central banks.
“If you took the tech sector alone against the S&P 500 excluding technology going back to 2000, we are about 2.8 standard deviations away from the average,” said Marc Dizard, chief investment officer at Huntington Bank.
“When you get the magnitude of that move, it’s not surprising to us that we would get a little bit of a pause, some consolidation and rebalancing where investors are taking profits off the table.”
In Europe, the broad STOXX 600 rose 0.92pc. MSCI’s gauge of stocks across the globe rose 0.42pc.
“Technology is a long-duration asset as the story plays out, not necessarily in the next six months. And when you have the Fed come out with a more hawkish tone, long-duration assets are going to sell off in that time period,” Dizard said.
US inflation data yesterday broke 4pc annually for the first time in three years as the Middle East conflict boosted energy prices, but the monthly reading was slightly below expectations, helping to push yields lower. The yield on benchmark US 10-year notes fell 1.37 basis points to 4.386pc. The 2-year note yield fell 2.64 basis points to 4.111pc.
Oil prices edged higher but were still near levels last seen before the start of the US-Israeli war on Iran, as expectations of rising supply from the Middle East outweighed demand concerns.
Brent crude futures were up 1pc to $74.49 a barrel.
In currencies, the dollar fell against major peers but was still near its highest level in a year. The euro was last at $1.1388, a whisker above Wednesday’s 13-month low, while the Japanese yen was near its lowest in 40 years against the dollar, with more intervention widely expected from Tokyo after the last bout around May failed to stem the currency’s decline. The yen strengthened 0.1pc against the greenback to 161.63 per dollar. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.29pc to 101.30. Gold rose as the US dollar fell. Spot gold rose 0.68pc to $4,027.67 an ounce.
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