Wall Street rally driven by AI stocks as Nasdaq hits record high, oil falls on Iran diplomacy hopes

On Wall Street, the Nasdaq Composite surged to a record-high close on this morning, lifted by gains in Advanced Micro Devices and other AI heavyweights.

The Nasdaq notched its first record-high close since June 2, while the S & P 500 is almost back at the record close it reached on August 13.

Investors pointed to signs that suggest spending on AI is still expanding, despite recent safety warnings from leaders of AI giants a week ago that triggered a global tech sell-off.

To give you an idea of how well US markets performed:

The Nasdaq gained 2.3% to 27,122 points

The Dow Jones Industrial Average rose 0.7% to 52,045 points, while the S & P 500 climbed 1.5% to end the session at 7,765 points.

Chip stocks rallied with Intel surging 12.2%, Arm Holdings up 17%, and the PHLX semiconductor index jumping 4.3%.

Advanced Micro Devices rose about 10% to reach a market capitalisation of $US1 trillion for the first time.

Meta shares soared 11.4% after Wells Fargo hiked its price target on the social media platform following the recent launch of its Muse AI assistant.

Interest rates and Iran war on investors' minds

Meanwhile, investors still remain wary of the interest-rate outlook after the US Federal Reserve last week raised rates for the first time in three years to fight inflation.

Traders see a 50% chance of another hike next month, CME's FedWatch showed.

On a related note, the Treasury's 10-year bond yield — which determines the US government's long-term borrowing costs —fell below the psychologically important 5% level.

That was after the price of oil futures fell below $US100 a barrel, its lowest level since September 9.

While Washington and Tehran exchanged threats through the weekend, US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to attend the UN General Assembly in New York this week.

- with Reuters

The crude oil price has sunk to its lowest level in 12 days as investors hoped for diplomatic progress on the Iran war due to this week's United Nations meeting and eyed a partial recovery in shipments from Saudi Arabia.

Brent crude futures fell almost 4% to $USUS99.86 per barrel.

WTI crude futures dropped 5% to $US95.43 per barrel.

Both benchmarks fell to their lowest since September 9.

On Sunday, Iran and the US exchanged new threats, although US President Donald Trump said he would be open to meeting Iranian President Masoud Pezeshkian, who is expected to be in New York this week for the UN General Assembly.

Iran has conveyed its conditions to mediators for re-engaging in negotiations, Al Jazeera reported, citing Iran's security chief, Mohsen Rezaei.

Partial recovery in Saudi exports

Fighting in the Middle East continued as Yemen's Iran-backed Houthis said they had attacked Riyadh as well as a Saudi Aramco facility in the Red Sea city of Yanbu, while pushing to cut off the Red Sea coast from remaining areas held by Saudi-backed forces.

China has asked Iran to help rein in the Houthis after an appeal to Beijing by Saudi Arabia following the attacks, according to three Iranian sources familiar with the matter.

The attacks by the Houthis on Aramco's East-West pipeline have prompted the firm to increase exports through the Strait of Hormuz this month and next after halting some shipments via Yanbu.

Expectations of a partial recovery in shipments from Saudi Arabia further weighed on prices.

- with Reuters