US Stocks Edge Higher Near Records on Buyout Deals and AI Gains
US stocks climbed higher on Monday, nearing record highs after two major buyout deals boosted market sentiment. The S&P 500 gained 0.7%, bringing it within 0.3% of its all-time high, while the Nasdaq composite surged 1.1% to set a new record. The Dow Jones Industrial Average added 90 points, or 0.2%. The biggest mover was PTC, which soared 33.5% after Schneider Electric announced a $22.6 billion acquisition, valuing PTC shares at $205 each. RXO also jumped 22.5% following a deal with C.H. Robinson Worldwide, where RXO investors could receive $30.25 per share.
Artificial-intelligence technology played a central role in both deals, driving gains across the AI sector. Nvidia, a key player in AI chip manufacturing, led the S&P 500 higher with a 2.1% rise, while Broadcom climbed 2.1%. Trading remained relatively subdued as investors awaited the start of the earnings reporting season. Analysts predict nearly 30% year-over-year profit growth for S&P 500 companies, which would mark the third consecutive quarter of growth above 25%.
Despite the market's strong performance, bond yields continued to rise, with the 10-year US Treasury yield reaching 5.31%, near its highest level since 2002. High yields could slow economic growth by increasing borrowing costs and reducing investor appetite for risky assets. Oil prices also fluctuated due to uncertainty surrounding the war with Iran, settling at $100.32 per barrel of Brent crude. A mixed report on US economic activity showed that while the services sector grew for the 27th straight month, the pace was slower than expected.
Internationally, France's CAC 40 fell 0.8% amid concerns over the country's high debt and strained budget. In contrast, Japan's Nikkei 225 surged 2.4%, driven by strength in technology stocks. The Federal Reserve's recent interest rate hike and expectations of another increase by year-end loom over the market, as rising inflation remains a key concern.