World stocks climb on chip rally; dollar steadies near one-year high
Global Market Performance and Key Drivers
By Chibuike Oguh
NEW YORK, June 25 (Reuters) - Global stocks rose on Thursday as strong earnings from chipmakers lifted sentiment, although investors remained wary about stretched valuations for AI-related shares, while the dollar hovered near a one-year high.
The benchmark S&P 500 ended flat while the Dow rose on Wall Street, led by industrials, healthcare and materials stocks.
Chipmaker Earnings Boost Sentiment
Micron was up 15.7% after the memory chipmaker's solid forecast helped to extend its AI-driven ascent.
Qualcomm rose 3.8% after reporting that it expects $15 billion a year in sales from its data center business by 2029.
Mixed Performance Among Tech Giants
The Nasdaq closed down, however, pulled lower by choppy trading among most megacap technology stocks. Apple lost 6.1% while Microsoft shed 3.5%.
The Dow Jones Industrial Average rose 0.14%, the S&P 500 ended flat, and the Nasdaq Composite fell 0.46%.
AI Valuations and Interest Rates Drive Sentiment
AI VALUATIONS, INTEREST RATES DRIVE SENTIMENT
Investor concern that valuations of AI-related companies have become stretched after years of gains has weighed on markets in recent days, leading to volatile sessions.
Markets are also pricing in higher interest rates from the U.S. Federal Reserve and other central banks.
Expert Insights on Market Movements
"If you took the tech sector alone against the S&P 500 excluding technology going back to 2000, we are about 2.8 standard deviations away from the average," said Marc Dizard, chief investment officer at Huntington Wealth Management.
"When you get the magnitude of that move, it's not surprising to us that we would get a little bit of a pause, some consolidation and rebalancing where investors are taking profits off the table."
Global Indices and Sector Performance
In Europe, the broad STOXX 600 rose 0.80%. MSCI's gauge of stocks across the globe rose 0.37%.
"Technology is a long-duration asset as the story plays out, not necessarily in the next six months. And when you have the Fed come out with a more hawkish tone, long-duration assets are going to sell off in that time period," Dizard said.
Inflation and Bond Yields
U.S. inflation data on Thursday broke above 4% annually for the first time in three years as the Middle East conflict boosted energy prices, but the monthly reading was slightly below expectations, helping to push yields lower.
The yield on benchmark U.S. 10-year notes fell 0.59 basis point to 4.394%. The 2-year note yield fell 1.2 basis points to 4.125%.
Commodities and Currency Markets
Oil Back to Pre-War Levels
OIL BACK TO PRE-WAR LEVELS
Oil prices edged higher but were still near levels last seen before the start of the U.S.-Israeli war with Iran, as expectations of rising supply from the Middle East outweighed demand concerns.
Brent crude futures settled up 2% at $75.26 a barrel.
Dollar and Other Major Currencies
In currencies, the dollar fell against major peers but remained near its highest level in a year.
The euro was last at $1.137, a whisker above Wednesday's 13-month low, while the Japanese yen was near its lowest in 40 years against the dollar, with more intervention widely expected from Tokyo after the last bout around May did not stem the currency's decline.
The yen was flat against the greenback at 161.80 per dollar.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.15% to 101.45.
Gold Prices React to Dollar Movement
Gold rose as the U.S. dollar fell. Spot gold rose 0.64% to $4,026.09 an ounce.
(Reporting by Chibuike Oguh in New York; additional reporting by Alun John; Editing by Kevin Liffey, Edmund Klamann, Rod Nickel)
