AI optimism is fueling tech stocks amid rising oil prices and bond yields

As the bond market exerts pressure on financial markets globally, optimism surrounding artificial intelligence (AI) is buoying U.S. stocks on Thursday. Despite the rising oil prices and bond yields, the U.S. market managed to maintain its strength.

The S&P 500 rose 0.3 percent and was poised to break a three-day losing streak, while the Dow Jones Industrial Average climbed 0.4 percent, and the Nasdaq composite increased by 0.5 percent. Technology stocks were the catalyst for this positive movement, with Micron Technology delivering a stronger-than-expected profit report for the latest quarter.

Micron's CEO, Sanjay Mehrotra, attributed the company's success to the AI boom, which is driving demand for memory chips. Despite its stock having gained over 270 percent year-to-date, Micron edged down by 0.1 percent following the profit report.

Other AI-related stocks also benefited from Micron's optimism, including Nvidia, which rose 0.6 percent, and Alphabet, which climbed 1.5 percent after unveiling its latest AI model, Gemini 4 Argon. These gains occurred despite increased volatility in the bond market, where rising yields have been unsettling financial markets worldwide.

The 10-year Treasury yield edged up to 5.30 percent from 5.29 percent late Wednesday, nearing its highest level since 2002. However, any stabilization would be considered a relief given its sharp increase from less than 5 percent roughly a week ago and from less than four percent before the Iran war began.

The bond market's fluctuations are driven by a variety of factors, including concerns about high inflation, surging oil prices, and the U.S. government's continued spending beyond its revenue. These factors do not seem to be abating anytime soon, and oil prices continued to rise, further pressuring inflation.

Meanwhile, Canada's main stock index, the Toronto Stock Exchange, saw a slight dip at the opening bell as gains in technology stocks were offset by losses in the financial and banking sector. Shopify shares rose 2.3 percent, Blackberry's stock gained 2.5 percent, and Constellation Software increased by nearly four percent. However, major Canadian banks experienced a decline between 0.75 and 1.5 percent each.