AI Rally Sets New Record: Concerns Over Oil Prices and the Fed?

U.S. stock markets closed mixed on April 24 (Eastern Time). The S&P 500 rose 0.8% to 7,165.08, while the Nasdaq surged 1.6% to a record-high 24,836.60. The Dow Jones Industrial Average dipped 0.2% to close at 49,230.71. Buying was concentrated in semiconductors and big-tech shares, led by a significant jump in Intel stock.

On the economic front, the University of Michigan’s April consumer sentiment index came in at 52.2, beating market expectations and easing fears of a sharp downturn. However, inflation expectations remain elevated, limiting hopes for an early Federal Reserve rate cut. The Department of Justice’s decision to conclude its investigation into Fed Chair Jerome Powell has boosted the likelihood of his confirmation for a second term in Washington. Reflecting these developments, the 10-year U.S. Treasury yield rose to 4.31% ahead of next week’s Federal Open Market Committee meeting.

In corporate earnings, Intel reported first-quarter earnings per share of $0.29 and revenue of $13.6 billion, significantly surpassing expectations and propelling its stock up over 20%, driven by strength in its data-center and AI businesses. Procter & Gamble also delivered a strong performance, posting EPS of $1.59 and revenue of $21.24 billion, supporting defensive stocks, though it warned that high oil prices could add about $150 million to its annual costs.

On the global front, amid rising hopes for further ceasefire talks in Islamabad over the Iran conflict, the U.S. announced it would send a special envoy to Pakistan. This decision pushed Brent crude to trade between $103 and $107 a barrel—roughly 50% above pre-war levels. While this benefits energy and defense stocks, escalating raw material and fuel costs remain a risk to consumer spending and corporate profit margins.