U.S. Stocks Near Record Highs on Buyout Deals and AI Surge

U.S. stocks pushed higher on Monday, nearing all-time highs after two major buyout deals boosted investor sentiment. The S&P 500 climbed 0.7%, pulling within 0.3% of its summer record, while the Nasdaq composite surged 1.1% to set its own record. The Dow Jones Industrial Average added 90 points, or 0.2%. Key driver PTC soared 33.5% after Schneider Electric agreed to acquire it for $205 per share, valuing the deal at $22.6 billion. Other software stocks, like Autodesk, also rose on the news.

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% on the news. Both companies highlighted the potential of artificial-intelligence technology in their deal announcements, lifting AI-related stocks. Nvidia, a major player in AI chip manufacturing, gained 2.1%, contributing significantly to the S&P 500’s rise. Broadcom also climbed 2.1%.

Trading volume remained light as markets awaited the start of the latest earnings reporting season. Analysts expect nearly 30% profit growth for S&P 500 companies in the third quarter, marking the third straight quarter of growth above 25%. Despite economic challenges, strong corporate earnings have kept stocks near record levels.

The oil market remained volatile due to uncertainty surrounding the war with Iran, with Brent crude prices swinging between $100 and $103 before settling at $100.32. Higher oil prices have pushed up bond yields, with the 10-year U.S. Treasury yield rising to 5.31%. Elevated yields could slow economic growth and reduce investor appetite for stocks.

A report on the U.S. services sector showed mixed results. While business activity grew for the 27th consecutive month, the expansion was weaker than expected. Input prices for services businesses also rose faster, signaling potential inflation risks. The Federal Reserve is widely expected to raise interest rates at least once by year-end to combat inflation.