Nasdaq Ends Nearly 3% Higher As AI Stocks Pop, AMD Enters $1 Trillion Club — AMD, ARM, META, AMZN, PSKY In Focus

• The S&P 500 ended Monday 1.5% higher, while the Nasdaq 100 added 2.8% and the Dow Jones Industrial Average gained 0.7%.
• Paramount Skydance settled lawsuits brought by 12 state attorneys general and the Writers Guild trade union related to its Warner Bros. merger.
• Treasury 10-year yields fell below 5%.   

US stock indices ended Monday higher amid strong gains in AI stocks, led by optimism around Meta’s Muse AI popularity, while Paramount Skydance settled a lawsuit filed by 12 states related to its takeover of Warner Bros. Discovery. 

 The S&P 500 ended Monday 1.5% higher, while the Nasdaq 100 added 2.8% and the Dow Jones Industrial Average gained 0.7%. The Russell 2000, which tracks stocks with small market capitalizations, rose about 0.5%.

The SPDR S&P 500 ETF (SPY) was up 1.5%, the SPDR Dow Jones Industrial Average ETF (DIA) rose 0.8%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) climbed 2.8%. 

Meanwhile, the VanEck Semiconductor ETF (SMH) and the iShares Semiconductor ETF (SOXX) added between 4% and 5%, tracking gains in Nvidia (NVDA), Advanced Micro Devices (AMD), Broadcom (AVGO) and Micron Tech (MU). The broader Vanguard Information Technology ETF (VGT) rose about 2.6%.

Retail sentiment on Stocktwits for QQQ, SPY, and DIA moved to ‘neutral’ from ‘bearish’ a week ago, with ‘high’ message volumes. 

US Market Drivers

Meta’s near 12% jump after its Muse AI topped app store charts, followed by Advanced Micro Devices (AMD) entry into the $1 trillion market cap club, jolted the overall AI space and eased investor concerns that AI capex wasn't turning into substantial revenue. 

A sharp pullback in energy markets bolstered market sentiment on Monday, with US crude oil futures tumbling 4.5% to $95.78 per barrel. At the same time, Brent crude dropped 3.4% to trade around $100.34 a barrel.

Government bond yields eased in tandem with the slump in oil prices. The benchmark 10-year Treasury yield slipped over four basis points to reach 4.951%. Longer-term rates also retreated, with the 30-year bond yield sliding to 5.284%.

Amid ongoing efforts to rein in persistent inflation alongside elevated borrowing costs, Fed President Alberto Musalem on Monday called for additional rate hikes to curb inflation after the Federal Reserve hiked interest rates last week.

“Higher-for-longer energy prices add to the case for further tightening,” wrote Ed Yardeni, president of Yardeni Research, in a Monday note.

Key Trending Stocks

Meta Platforms Inc.’s (META) new personal artificial intelligence assistant, Muse, has taken top billing on mobile app store charts and sent company shares soaring to their best performance in over a year, even as retail giant Amazon.com Inc. (AMZN) has moved to block the tool from its site. 

Paramount Skydance Corp. (PSKY) stock soared to its best day in more than six months after finalizing an agreement with California and several opposing states to resolve litigation aimed at blocking its $110 billion acquisition of Warner Bros. Discovery Inc. 

Amazon (AMZN) will invest another $1.9 billion in its Delivery Service Partner (DSP) program in 2027, bringing its total investment to $21.7 billion since the program launched eight years ago.  

Coinbase (COIN) shares hit a more-than-four-month high on Monday amid a broader cryptocurrency rally, and the exchange also announced plans to give eligible U.S. retail traders access to IPO allocations through its app. 

Critical Metals (CRML) drew investor attention on Monday after the U.S. secured a crucial deal to strengthen its rare-earth supply chain, with Clear Street saying the U.S.-Greenland security agreement could accelerate development of the company’s Tanbreez project. 

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