The Nasdaq 100 hit a record high on Tuesday as a retreat in oil prices and optimism about AI developments drove a rally in tech stocks.

The index — which is heavily weighted towards the share prices of big tech companies, particularly AI and hyperscalers — closed 0.8 per cent higher at a new peak. It also struck a new intraday high that overtook its previous record set in early June. The broader S&P 500 closed fractionally lower.

Investors said that the success of Meta’s new Muse AI model, which quickly became the most downloaded free app on the Apple App Store after its launch this month, generally boosted sentiment this week. Meta rose 11.4 per cent on Monday, though shed 0.6 per cent on Tuesday.
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Michael Zigmont, co-head of trading at Visdom Investment Group, said the moves “look like the start of a broad momentum trade” for tech stocks, describing Monday’s trading session on Wall Street as an “everybody back into the pool moment”.

Tech stocks have wavered since early June, when a brutal unwinding of big bets on the sector saw some of this year’s biggest stock market winners tumble, including South Korea’s chip and memory giants. The sector has struggled to regain its footing since then, as soaring oil prices and a bond market rout have added to investors’ list of worries.

Oil prices have fallen and bonds have rallied in recent days on hopes of progress towards a settlement in the Iran war. Brent crude fell as much as 2.9 per cent in early trading on Tuesday after Saudi Arabia signalled the reopening of a key export pipeline.

“AI Fomo [fear of missing out] is back in force,” said Emmanuel Cau, chief European equities strategist at Barclays, adding that there were “several factors in play” in the rally, including lower oil prices and reports of US-China talks on AI.

Cau said that “the move was reflective of much cleaner positioning in the tech space” after the June deleveraging.

Chipmakers were among the biggest gainers on Tuesday, as investors bet that the success of models such as Muse would boost chip demand.

Sandisk gained 6.8 per cent, while Seagate Technology gained 4.8 per cent and Western Digital was up 3.7 per cent.

Treasury yields across maturities fell, with the benchmark 10-year yield down 0.01 percentage points at 4.95 per cent. Yields have risen dramatically in recent months, with prices falling, as traders have demanded a higher premium for their exposure to risks including price pressures related to the US war in Iran, worries about the US deficit and an economy firing on all cylinders.

The jump in Treasury yields, which lifts interest rates on debt for companies, has hit the share prices of tech companies heavily dependent on borrowing.