US Stocks Reach Records as Oil Prices Stabilize and AI Drives Borrowing Boom
US stock markets continued their upward trajectory on Tuesday, with the Nasdaq and S&P 500 reaching fresh record highs. The Nasdaq, driven by AI enthusiasm, advanced 0.5 percent, while the S&P 500 rose 0.6 percent. This rally was supported by a retreat in oil prices, which eased supply concerns and tempered worries about rising government borrowing costs. European and Asian markets also saw gains, following the positive sentiment from Wall Street.
Oil prices stabilized as Gulf exports began to recover, with Brent North Sea crude closing just above $100 a barrel. Dan Coatsworth of AJ Bell noted that the decline in oil prices boosted interest-rate-sensitive stocks like real estate and consumer cyclicals. However, commodities analyst Arne Lohmann Rasmussen pointed out that while crude exports were back to 91 percent of pre-war levels, refined product exports remained at only 60 percent, contributing to soaring fuel costs.
Despite the market gains, uncertainty lingered among traders due to the Middle East crisis, which has pressured central banks to raise interest rates to combat energy-driven inflation. Government bond yields have surged to levels not seen in decades, raising concerns about ballooning debt. The race to build AI data centers, servers, and chips has further compounded the problem, with tech giants like Google, Amazon, and Microsoft borrowing heavily. Chris Della Fave of Post Oak Group estimated that AI accounts for 25 percent of all corporate bond issuance, up from four percent two years ago.
In company news, UK online fashion retailer Asos saw its share price drop over 9 percent after customers received a notification about a potential hack. Meanwhile, Paramount completed its takeover of Warner Bros. Discovery, uniting two major Hollywood studios under the leadership of David Ellison. Skydance stocks closed down 2.7 percent on Wall Street.