World stocks climb on chip rally; dollar steadies near one-year high

Global stock markets climbed on Thursday, buoyed by a significant rally in chipmaker stocks driven by positive earnings forecasts. Micron surged over 10% after issuing a solid outlook, extending its artificial intelligence-driven gains, while Qualcomm saw a 4% increase following its projection of $15 billion in annual sales from its data center business by 2029.

Despite the positive momentum in certain sectors, broader market sentiment remains cautious. Investors are increasingly concerned about the stretched valuations of AI-related companies after years of growth. This has led to volatile trading sessions, with major technology stocks like Apple experiencing declines. The Nasdaq Composite fell 0.46%, while the Dow Jones Industrial Average rose 1% and the S&P 500 gained 0.21%.

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When you get the magnitude of that move, it's not surprising to us that we would get a little bit of a pause, some consolidation and rebalancing where investors are taking profits off the table.

Analysts note that the tech sector's performance, when viewed independently, shows a significant deviation from historical averages. "When you get the magnitude of that move, it's not surprising to us that we would get a little bit of a pause, some consolidation and rebalancing where investors are taking profits off the table," said Marc Dizard, chief investment officer at Huntington Bank. He added that technology, as a "long-duration asset," is vulnerable to shifts in interest rate expectations.

In Europe, the STOXX 600 index rose 0.92%, and MSCI's global stock index climbed 0.42%. Meanwhile, oil prices saw a modest increase, trading near levels seen before the recent conflict in the Middle East, as anticipated supply increases tempered demand concerns. The U.S. dollar remained near a one-year high against major currencies, despite a slight dip, while the Japanese yen traded near its lowest point in 40 years against the dollar.

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Technology is a long-duration asset as the story plays out, not necessarily in the next six months. And when you have the Fed come out with a more hawkish tone, long-duration assets are going to sell off in that time period.