Wall Street Edges Higher as Global Markets Rally and Investors Weigh Rates, AI Bets

BY EMMANUEL OGBONNA

U.S. stocks moved modestly higher Monday, extending recent gains as a powerful rally in Asian markets set a positive tone for global trading and investors continued to balance optimism about economic growth against lingering concerns over valuations, inflation and the pace of interest-rate cuts.

The S&P 500 rose 0.5%, edging closer to the record high it reached two weeks ago. The Dow Jones Industrial Average added 20 points, a gain of less than 0.1%, while the Nasdaq composite climbed 0.9%, helped by renewed strength in technology and semiconductor shares.

The relatively calm session in New York followed a surge in Asian markets, led by Japan, where the Nikkei 225 jumped 3.9% to a record high. The rally came after a decisive parliamentary election victory for the ruling party, which investors believe could give Prime Minister Sanae Takaichi greater latitude to advance economic reforms aimed at stimulating growth and improving corporate governance. Optimism in Japan spilled over into the broader region, lifting stocks in South Korea, Hong Kong and China.

On Wall Street, the latest gains built on momentum from the end of last week, when U.S. stocks posted their strongest single-day advance since May. Even so, many investors remain cautious. Critics argue that stock prices have climbed too far, too fast, leaving markets vulnerable if economic data or corporate earnings disappoint.

Another major question hanging over markets is whether the massive investments being made in artificial intelligence by technology giants and other companies will ultimately translate into sustained profits. While enthusiasm around AI has been a key driver of the market’s rally this year, doubts persist about the timeline and scale of returns.

Still, some of the biggest beneficiaries of the AI boom helped push stocks higher Monday. Semiconductor shares were among the strongest performers, with Nvidia rising 2.4% and Broadcom gaining 3.3%, making them two of the largest contributors to the S&P 500’s advance.

In corporate news, Kroger shares climbed 3.9% after the grocery chain named a former Walmart executive as its next chief executive officer, a move investors welcomed as the company navigates a highly competitive retail environment.

Energy stocks also drew attention after offshore drilling company Transocean reversed early losses and finished up 5.9%. The gains followed its announcement that it plans to acquire Valaris in an all-stock deal valued at $5.8 billion. Valaris shares soared 34.3% on the news, reflecting investor enthusiasm for consolidation in the offshore drilling industry.

Not all stocks participated in the rally. Shares of Hims & Hers plunged 16% after pharmaceutical giant Novo Nordisk filed a lawsuit alleging that the company is illegally selling versions of its weight-loss treatments. The legal action follows a decision by the U.S. Food and Drug Administration to restrict access to ingredients used to copy popular weight-loss drugs. Hims & Hers pushed back strongly, accusing large drugmakers of using the courts to stifle competition and limit consumer choice. Novo Nordisk’s U.S.-listed shares rose 3.6%.

Workday also weighed on the market after falling 5.1%. The software company said its chief executive officer, Carl Eschenbach, is stepping down, with co-founder Aneel Bhusri set to return to the role, a leadership change that introduced uncertainty for some investors.

By the close of trading, the S&P 500 had gained 32.52 points to finish at 6,964.82. The Dow rose 20.20 points to 50,135.87, and the Nasdaq added 207.46 points to end at 23,238.67.

In the bond market, Treasury yields were little changed as investors looked ahead to a series of potentially market-moving economic reports later in the week. The U.S. government is scheduled to release its latest monthly employment report on Wednesday, followed by fresh inflation data on Friday. Either could significantly influence expectations for the Federal Reserve’s next move on interest rates.

The central bank has paused its rate-cutting cycle, but signs of a weakening job market could prompt policymakers to resume cuts sooner than expected. Persistently high inflation, by contrast, could keep rates elevated for longer. The yield on the 10-year Treasury note eased slightly to 4.20% from 4.22% late Friday.

Expectations that the Fed will eventually lower rates later this year remain a key pillar supporting stock prices near record levels. Lower borrowing costs can stimulate economic activity and boost corporate profits, though they also risk reigniting inflationary pressures.

Elsewhere in financial markets, assets that have experienced sharp swings in recent weeks showed renewed strength. Gold rose 2% to settle at $5,079.40 an ounce, continuing a volatile stretch after roughly doubling in price over the past year. Silver, which has seen even larger price fluctuations, surged 6.9%.

Bitcoin traded just below $71,000 after briefly moving above that level over the weekend. The cryptocurrency has been volatile, having fallen close to $60,000 last week, well below its record high set in October.

Overseas, stock markets across Asia posted broad gains, with South Korea’s Kospi jumping 4.1%, Hong Kong rising 1.8% and Shanghai adding 1.4%. European markets were more subdued, though still positive, with Germany’s DAX up 1.2% and France’s CAC 40 gaining 0.6% as investors there also assessed global growth prospects and interest-rate expectations.