Nasdaq surges 2.3% to all-time high as AI stocks roar back

US stocks rallied across the board Monday, driven by a strong rebound in AI-related shares. Falling crude oil prices and a pullback in Treasury yields simultaneously eased the pressure that had been weighing on technology stocks. The tech-heavy Nasdaq Composite surged more than 2 percent to close at an all-time high.

The Nasdaq Composite rose 599.55 points, or 2.3 percent, to finish at 27,122.09 on Monday (local time), setting a new closing record.

The S&P 500 gained 114.20 points, or 1.5 percent, to close at 7,764.70, while the Dow Jones Industrial Average climbed 366.19 points, or 0.7 percent, to 52,048.83.

AI stocks drove the day's gains. Buyers poured back into technology shares that had been rattled in recent sessions by concerns over frothy AI investment. As investors refocused on the scale of ongoing spending on AI development, semiconductors and big-tech names advanced broadly.

AMD led the charge, surging roughly 10 percent to surpass a $1 trillion market cap for the first time. Expectations that AMD's role in the AI computing market will expand pushed the stock higher. Intel, Arm and other chipmakers also rose, lifting the Philadelphia Semiconductor Index 4.3 percent.

Meta jumped more than 11 percent after Wells Fargo raised its price target on the stock, citing optimism over the company's AI business. Buying spread across the IT and communication services sectors, with eight of the S&P 500's 11 sectors finishing higher.

Falling oil prices added to the market's tailwind. Brent crude dropped more than 3 percent to around $100 a barrel as hopes grew for a diplomatic resolution to tensions in the Middle East. Sentiment was lifted after President Donald Trump left open the possibility of meeting Iranian President Masoud Pezeshkian, who is visiting New York this week for the UN General Assembly.

The slide in oil prices also eased inflation concerns and relieved some pressure in the bond market. The yield on the 10-year US Treasury note fell below 5 percent, a level markets had recently treated as a key psychological threshold.

Worries about a prolonged period of high borrowing costs had grown since the Federal Reserve raised its benchmark interest rate last week, but Monday's simultaneous drop in oil prices and Treasury yields revived appetite for growth stocks.

The virtual assets market also joined the broader recovery in risk appetite. Bitcoin climbed more than 6 percent, and crypto-related stocks including Coinbase also posted gains.

Market attention is expected to shift this week to Middle East diplomacy on the sidelines of the UN General Assembly and to talks between US and Chinese leaders. If regional tensions ease further and oil prices stabilize, the inflation and long-term interest rate pressures that have weighed on equities in recent weeks could diminish.