Trading Day: Oil slips, Nasdaq rips

On Tuesday, the Nasdaq soared to a new record high, driven by optimism surrounding AI advancements and a decrease in global oil prices, while investors focused on the approaching US-China leaders' summit in Washington. Meanwhile, concerns grew over the cost-effectiveness of US AI models compared to cheaper Chinese alternatives. In a recent column, the author explored the ongoing US-China artificial intelligence rivalry and the fear surrounding AI's potential threat to humanity, as warnings about the technology proliferated simultaneously with apprehensions about China's cheaper AI potentially rendering expensive US models economically unfeasible.

Trump indicated a near-deal with Iran, offering to reopen the Hormuz Strait, while Xi and Trump met in Washington, prompting traders to navigate the AI-related market sentiment. Recent developments in AI, such as smart glasses and AI pins, have raised privacy concerns that challenge the next big technology trend. In addition, corporate bond buyers have become more selective amid the surge in AI-related debt offerings.

The S&P 500 remained flat, and the Dow Jones fell by 0.4%. Global markets remained relatively stable, with the Eurozone slightly down and the UK experiencing a 0.3% decline.

Several sectors on the S&P 500 experienced gains and losses, including Materials (+2%) and Financials (-2%), with Chip stocks (+2%). Specific stocks like SanDisk (+7%) and Micron Technology (+5%) saw significant increases, while GoDaddy and Charles Schwab (-6%) experienced declines. The US Dollar edged closer to a seven-week high, while the South Korean Won recorded its best day in a month.

Treasury bonds showed minimal change across the curve, and the 2-year auction was relatively subdued despite the highest yield since May 2023.

As policymakers worldwide delivered speeches, interviews, and media appearances, expectations remained largely unchanged due to pre-existing consensus views on likely policy paths. The Federal Reserve, European Central Bank, Bank of England, and Bank of Japan, among others, provided insights, but the sheer volume of commentary rendered it challenging for investors to discern actionable shifts.

The Federal Reserve and ECB officials, among others, were set to address the public and markets, offering additional perspectives to guide market expectations.