US Markets Hit Fresh Highs as AI Momentum Offsets Middle East-Led Macro Volatility

index Update

US stocks recovered from early caution to close at fresh record highs on Monday, supported by President Trump’s comments that Iran talks were progressing and renewed strength in AI-linked stocks. The S&P 500 rose 0.3%, the Nasdaq gained 0.4%, and the Dow added 46 points, led by technology names as Nvidia surged after unveiling its RTX Spark Superchip. The rally lifted Microsoft, Oracle, Micron, and Dell, while IBM jumped on renewed Trump-related attention and energy stocks advanced alongside higher oil prices.

Market Movers

Among the top-performing stocks of the session Hitek Global Inc. surged 350.68%, while Abits Group Inc. rallied 115.79%. On the losing side, NextCure, Inc. fell 45.48%, while America's Car-Mart, Inc. declined 44.18%, making them the weakest performers during the trading day.

Commodities Update

Commodity markets remained volatile on Tuesday as WTI and Brent Crude fell around 1% after sharp gains in the previous session, with investors assessing uncertainty around US-Iran negotiations, the reopening of the Strait of Hormuz, and geopolitical tensions linked to Israel’s military actions in Lebanon. Oil prices were supported by concerns over prolonged disruptions to Persian Gulf energy flows but eased after President Donald Trump said talks with Iran were still ongoing and a memorandum to reopen the Strait could be reached soon. Meanwhile, gold and silver recovered from recent losses, supported by safe-haven Demand amid stalled US-Iran talks, although softer oil prices helped ease Inflation concerns. Investors remained focused on upcoming US labor market data, including JOLTS and monthly employment figures, for further clarity on the Federal Reserve’s policy outlook.

Macro Updates

The dollar index traded flat to slightly lower around 99.1 on Tuesday as a modest pullback in oil prices eased some pressure, though markets remained cautious amid Middle East tensions and uncertainty over US-Iran talks. Investors also focused on upcoming US labour market data, which could influence Federal Reserve policy expectations under new chair Kevin Warsh, with markets pricing in about a 70% chance of a 25bps rate hike by year-end and a full hike by March 2027.

Bonds Commentary

The US 10-year Treasury Yield eased to 4.43% on Tuesday as slightly lower oil prices provided relief, though market sentiment remained cautious amid Middle East tensions and uncertainty over US-Iran talks. Investors are awaiting key US labour market data, including the jobs report, to assess the Federal Reserve’s policy path under new chair Kevin Warsh, with markets pricing in about a 70% chance of a 25bps rate hike by year-end and a full hike by March 2027.

Futures Update

US Equity futures edged lower from record levels as Middle East energy-Supply uncertainty weighed on market sentiment, with Dow futures down over 200 points while S&P 500 and Nasdaq 100 contracts slipped modestly. Oil remained elevated amid continued Israel-Lebanon strikes and uncertainty around Iran peace talks and the Strait of Hormuz. Traditional sectors faced pressure as JPMorgan and P&G declined premarket, while software stocks pulled back after the previous session’s rally on renewed concerns over AI spending. Alphabet fell 2% after announcing an $80 billion equity issuance to fund AI infrastructure, while HPE and Marvell surged on AI-driven optimism and stronger growth expectations.

The S&P 500 remains decisively bullish, closing at another record high of 7,599.95 while continuing to trade comfortably above both the 21-day EMA (7,408.37) and 50-day EMA (7,202.41), reinforcing the strength of the ongoing uptrend that began from the April lows. Price action continues to print a sequence of higher highs and higher lows, with Monday's session reaching a fresh intraday high of 7,617.66, reflecting persistent buying interest and institutional support. The sharp increase in Volume to 3.58 billion shares further confirms strong market participation behind the advance. However, the RSI at 74.51 has moved deeper into overbought territory, signaling that momentum is becoming stretched and raising the likelihood of a near-term pause, consolidation, or modest pullback. Despite this overbought condition, the prevailing trend remains firmly positive, and any short-term weakness is likely to be viewed as a buying opportunity as long as the index continues to hold above key moving-average support levels.