US Stocks Near Records on Buyout Deals and AI Strength

U.S. stocks edged closer to their all-time highs on Monday, boosted by two major buyout announcements. The S&P 500 climbed 0.7%, pulling within 0.3% of its record high set earlier in 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 gains with a 33.5% surge after Schneider Electric of France agreed to buy the software company for $22.6 billion. The deal also lifted other software stocks, with Autodesk rising 4.5%. Meanwhile, RXO jumped 22.5% after C.H. Robinson Worldwide announced plans to acquire it for $30.25 per share, though C.H. Robinson itself fell 10.8%.

The market's gains were further supported by strong performance in the artificial-intelligence sector. Nvidia, a key player in AI chip technology, rose 2.1%, contributing significantly to the S&P 500's advance. Broadcom also climbed 2.1%. Analysts are anticipating robust earnings growth for the third quarter, with forecasts suggesting nearly 30% year-over-year profit growth for S&P 500 companies. Such strong growth has helped stocks rally despite ongoing economic concerns.

Trading activity was relatively subdued as investors awaited the start of the latest earnings reporting season. Oil prices remained volatile due to uncertainty surrounding the war with Iran, with Brent crude settling at $100.32 per barrel after fluctuating between $100 and $103. Higher oil prices have contributed to rising bond yields, with the 10-year U.S. Treasury yield reaching 5.31%. Elevated yields could slow economic growth by increasing borrowing costs and reducing investor appetite for high-priced stocks.

A mixed report on the U.S. economy showed that service sector activity grew for the 27th straight month, though at a slower pace than expected. The report also indicated that prices for materials and services in the sector were rising faster, raising concerns about future inflation. Wall Street expects the Federal Reserve to raise interest rates at least once more by the end of the year to combat inflation. Internationally, France's CAC 40 fell 0.8% amid worries about the country's debt and budget strains, while Japan's Nikkei 225 surged 2.4% on strength in technology stocks.