Global stock markets continued to rise midweek as investors showed renewed confidence in the ongoing bull run. The S&P 500 gained 0.6% by midday in New York, supported by strength in technology shares. The NASDAQ 100 climbed 0.9%, while the Dow Jones Industrial Average added 0.4%.
In Europe, the Stoxx 600 increased 0.8%, and the MSCI World Index rose 0.4%. The Russell 2000 Index also advanced 0.9%, reflecting broad participation across equity markets.
The rally arrives as the S&P 500 nears new highs, up almost 35% from its April lows. Analysts cite strong investor demand, strong underlying corporate fundamentals, and optimism over continued rate cuts by the Federal Reserve as reasons for the strength.
Mark Haefele, of UBS Global Wealth Management, stated that current valuations remain significantly below those observed during the dot-com era, and the bull market is still alive. The majority of sectors in the S&P 500 advanced, including technology stocks.
The interest in artificial intelligence has driven the most recent trend in the market. The traders still prefer AI-related firms, despite the valuations being overstretched. According to Peter Oppenheimer of Goldman Sachs, the recovery in big tech companies is associated with strong earnings growth and is unlike other speculative bubbles of the past. Nevertheless, strategists recommend diversification to mitigate exposure to sector volatility.
Market participants are looking forward to the publication of the Federal Reserve meeting minutes to gain more insight into the direction of monetary policy. Brown Brothers Harriman analysts believe that the central bank will lean more towards allowing the economic climate to regulate itself by December, given shaky labor markets and the slackening of inflationary pressure.
Equity markets have demonstrated significant resilience, with minimal day-to-day volatility, despite concerns about the ongoing shutdown of the US government and the scarcity of economic data.
In currency markets, the Bloomberg Dollar Spot Index rose 0.2%, reflecting a stronger US dollar. The euro fell 0.4% to $1.1606, while the British pound slipped 0.3% to $1.3391. The Japanese yen weakened 0.5% to 152.73 per dollar.
Treasury yields were mixed, with the 10-year yield steady at 4.12% ahead of a $39 billion auction, and the 30-year yield edging down to 4.71%. Germany’s 10-year yield declined to 2.68%.
Commodities strengthened, with West Texas Intermediate crude rising 1.8% to $62.84 per barrel. Spot gold gained 1.5% to reach $4,046 an ounce, surpassing $4,000 for the first time. Precious metal miners, including Newmont and Barrick, advanced as investors sought safety amid political uncertainty.
Corporate activity remained robust. Elon Musk's xAI doubled its financing round to $20 billion, and Cisco Systems, a networking company, launched new data center networking technology targeting AI. Verisure Plc soared on its initial European IPO, raising $3.7 billion in capital.
Meanwhile, BMW updated its earnings projections due to declining Chinese demand and increased tariff expenses, and SoftBank announced a $5.4 billion deal to acquire ABB's industrial robotics division.
As the current bull market progresses into its third year, historical data suggest that it may continue its positive performance until the end of the year. Analysts maintain a cautious stance but consider brief declines as investment opportunities, despite elevated valuations and continuing macroeconomic uncertainties.