U.S. stock indices closed higher on Tuesday, with the Nasdaq and S&P 500 setting new record closing highs. The Nasdaq climbed to an intraday peak of 25,361.05 points. The gains came as U.S. Defense Secretary Hagerseas stated that the U.S.-Iran ceasefire agreement remains in effect, and that Iran's attacks on the UAE have not yet reached the threshold for restarting large-scale military operations. Oil prices declined following the remarks.
In market action, the Dow Jones Industrial Average rose 356.35 points, or 0.73%, to close at 49,298.25. The Nasdaq Composite gained 258.32 points, or 1.03%, finishing at 25,326.13. The S&P 500 added 58.50 points, or 0.81%, to end the session at 7,259.25. The latter two indices achieved new record closing highs. Notable stock movements included Nvidia falling 1%, while Micron Technology surged 11%, Intel jumped 12.9%, and SanDisk advanced 12%. The Nasdaq Golden Dragon China Index closed up 0.12%.
European markets also saw broad gains. Germany's DAX 30 index increased by 375.44 points, or 1.56%, to 24,411.00. France's CAC 40 rose 86.19 points, or 1.08%, to 8,062.31. The Euro Stoxx 50 index advanced 105.35 points, or 1.83%, to 5,868.96. Spain's IBEX 35 climbed 313.92 points, or 1.81%, to 17,670.02, and Italy's FTSE MIB index gained 1,094.37 points, or 2.30%, to 48,572.50. Conversely, the UK's FTSE 100 index declined by 144.16 points, or 1.39%, to 10,219.77.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, edged up 0.07% to settle at 98.441. In late New York trading, the euro traded at $1.1700, up from $1.1692 the previous session. The pound sterling was at $1.3551, compared to $1.3534. The U.S. dollar bought 157.88 Japanese yen, up from 157.24, and traded at 0.7827 Swiss francs, down from 0.7836. It also exchanged for 1.3618 Canadian dollars, up from 1.3611, and 9.2598 Swedish kronor, down from 9.2861.
In cryptocurrencies, Bitcoin rose over 1.2% to $81,050, while Ethereum gained 0.36% to $2,362.96.
Oil prices fell sharply. The June delivery West Texas Intermediate crude futures contract dropped $4.15, or 3.9%, to settle at $102.27 per barrel. The July Brent crude futures contract declined $4.57, or 3.99%, to close at $109.87 per barrel.
Precious metals saw mixed moves, with spot gold settling at $4,558.47 per ounce and spot silver finishing at $72.845 per ounce.
In macroeconomic news, bond traders are increasing bets that the Federal Reserve's next policy move will be an interest rate hike rather than a cut. Swaps tied to the central bank's policy decisions now indicate a more than 50% probability of a rate hike by next April before any cuts occur. This shift comes as policymakers appear increasingly divided on the interest rate outlook. Lawrence Gillum, chief fixed income strategist at LPL Financial, noted that while the possibility of rate cuts this year still exists, it diminishes as the Iran conflict persists.
Saudi Arabia reduced the official selling price for its Arab Light crude bound for Asia in June by $4 per barrel to a premium of $15.50 over the regional benchmark. This reduction was smaller than the $8 per barrel drop anticipated by the market. Despite the cut, the June premium remains the second-highest on record. Export routes for Gulf oil producers are severely constrained due to the effective closure of the Strait of Hormuz. Saudi Arabia is one of the few countries still able to export crude via a pipeline to the Yanbu port on the Red Sea.
OpenAI's president testified in court that the company's computing costs have surged from approximately $30 million in 2017 to hundreds of billions of dollars this year, as it develops more advanced AI models and expands its user base. The company has previously committed to investing over $1.4 trillion in AI infrastructure in the coming years.
The EU's top trade official has called on the U.S. to adhere to the agreed 15% tariff rate, following threats from the U.S. administration to raise tariffs on EU car imports to 25%. The EU commissioner for trade met with the U.S. Trade Representative, with both sides agreeing to enhance political and technical engagement.
In corporate news, Advanced Micro Devices provided a strong earnings outlook for the current quarter, indicating benefits from soaring AI demand. The chipmaker forecast second-quarter revenue of approximately $11.2 billion, plus or minus $300 million, surpassing the average analyst estimate of $10.5 billion. Following the announcement, AMD's stock surged over 14% in after-hours trading. The outlook suggests AMD is gaining orders from major clients investing heavily in AI computing, despite Nvidia's dominance in the AI processor market.
Anthropic is reportedly planning to commit around $200 billion to Alphabet over the next five years as part of an agreement set to begin next year. This commitment would represent over 40% of the total "revenue backlog" disclosed by Alphabet to investors last week.
Meta Platforms is developing a highly personalized AI assistant capable of performing everyday tasks, according to reports. The project, internally tested by employees, aims to create a product similar to OpenClaw, which allows users to create autonomous AI agents. The assistant would be powered by a new AI model, though some have questioned user willingness to share sensitive data like health and financial information.
Apple is set to allow users to select from various external AI models for different tasks within its upcoming software updates, including iOS 27. This move is part of Apple's strategy to position its devices as comprehensive AI platforms. The company is already collaborating with Alphabet to enhance the underlying models supporting Siri and with Anthropic on internal AI infrastructure.
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