Stocks Near Records as Buyouts Boost Market and Oil Prices Swing Lower
U.S. stocks edged closer to their all-time highs on Monday, buoyed by a pair of major buyout announcements. The S&P 500 climbed 0.7%, pulling within 0.3% of its record set during the summer. The Dow Jones Industrial Average added 90 points, or 0.2%, while the Nasdaq composite rallied 1.1% to set its own record.
PTC led the market with a 33.5% surge after Schneider Electric of France agreed to acquire the software company for $205 per share in a $22.6 billion deal. The news lifted other software stocks, with Autodesk rising 4.5%. Meanwhile, RXO jumped 22.5% after C.H. Robinson Worldwide announced plans to buy the truck brokerage business for $30.25 per share. C.H. Robinson fell 10.8%, marking the largest loss in the S&P 500.
Both deals highlighted the promise of artificial-intelligence technology, boosting stocks across the AI industry. Nvidia, a key player in AI chip manufacturing, gained 2.1%, the strongest force lifting the S&P 500. Broadcom also climbed 2.1%. Analysts expect strong profit growth for companies in the S&P 500, forecasting nearly 30% year-over-year growth for the third quarter, which would mark the third straight quarter of growth above 25%.
Trading was otherwise subdued as investors awaited the start of the latest earnings reporting season. The oil market remained volatile due to uncertainty surrounding the war with Iran, with Brent crude settling at $100.32, down 1.9%. High oil prices have pushed up bond yields, with the 10-year U.S. Treasury yield rising to 5.31%. The strong U.S. economy, driven by business spending on AI data centers and consumer spending, continues to support stock markets despite high inflation.
A report on Monday showed mixed signals for the U.S. economy. While service industries grew for the 27th straight month, the growth was weaker than expected. The report also indicated faster price increases for materials and services, a potential warning sign for inflation. The Federal Reserve is expected to raise its main interest rate at least once by the end of the year to combat inflation. Abroad, France’s CAC 40 fell 0.8%, while Japan’s Nikkei 225 jumped 2.4% on strength in technology stocks.