US Stocks Rise as AI Shares Stabilise and Oil Prices Fall

US stocks opened higher on Monday, Nov 2, as technology shares steadied after a sharp October sell-off and falling oil prices improved risk appetite. The gains mark a pause in pressure on AI-linked companies, but investors still want evidence that heavy spending can produce returns.

At the open, the Dow Jones Industrial Average rose 403.09 points, or 0.78 per cent, to 52,173.40. The S&P 500 added 33.80 points, or 0.45 per cent, to 7,613.87, while the Nasdaq Composite climbed 159.07 points, or 0.63 per cent, to 25,596.07. These are opening levels, so they capture the initial reaction rather than the full session’s trading.

AI spending faces a returns test

The scale of October’s repricing puts Monday’s advance in perspective. The tech-heavy Nasdaq 100 lost over US$2.5 trillion in market value last month and came close to correction territory. Investors had become more wary of Big Tech’s rising AI spending while waiting for clearer signs of stronger returns. A bounce in share prices can ease immediate pressure, but it doesn’t answer that underlying question.

Financing adds another point of scrutiny. Several companies have recently used the bond market to fund investment in AI. That can support large spending plans, but it also ties the case for those plans more closely to borrowing costs: as financing becomes more expensive, investors may ask harder questions about the timing and scale of expected returns.

Recent reports have added to doubts about the sector. One said OpenAI had cut its target for its latest funding round by US$10 billion. Another said Blackstone had told investors that Anthropic might not obtain an investment-grade rating after its initial public offering. Those reports don’t settle the prospects of either company, but they help explain why sentiment toward the AI trade was mostly negative last week.

The next company updates could sharpen the distinction between firms that can sustain investor confidence and those that fall short of expectations. Rival chipmaker AMD is due to report later this week. Kiran Ganesh, a multi-asset strategist at UBS Global Wealth Management, said volatility was likely to persist through the reporting period, with individual companies at risk of being punished if they failed to meet market expectations on multiple fronts.

Oil’s decline supports the opening mood

Crude prices fell more than 4 per cent as talks between Iranian and Qatari officials about a possible deal raised hopes that Middle East supply disruptions could ease. Lower oil prices can lift risk appetite by reducing concern about energy costs, but the move is tied to an uncertain outcome. Any change in supply expectations could alter that support.

That makes the market’s early rise a combination of two different forces: some stabilisation in technology shares and relief from falling oil. Neither by itself shows that investors have resolved their concerns about AI spending or the durability of energy supply. The session’s later trading, along with company updates, will help show whether the opening move reflects wider confidence or a temporary easing of pressure.

What investors are watching

The week’s market focus also includes the US midterm elections on Tuesday, a potential source of uncertainty for investors assessing the outlook for US equities. Seth Meyer, global head of client portfolio management at Janus Henderson Investors, said such elections tend to be unfavourable for the party in power and that a shift in control of the House of Representatives would return the country to divided government, a familiar arrangement.

For shareholders in large technology companies, the immediate test remains whether spending plans can support the returns investors expect, especially when some funding is debt-financed. For companies seeking capital, the mood around AI may affect how readily investors support new financing. And for the broader market, the fall in oil offers short-term relief while leaving supply risks in view.

Monday’s opening gains therefore look like a reprieve, not a verdict on the AI investment cycle. The key signals ahead are how companies address the gap between spending and returns, and whether lower oil prices hold as supply expectations develop.