The S&P 500 added 0.4% to close at a fresh record on Thursday, the Nasdaq posted a solid gain of 0.6%, while the Dow Jones gained 260 points.
Micron Technology spearheaded the rally, jumping 14.7% after delivering an upbeat earnings outlook, which triggered a wave of gains across the semiconductor sector, with Applied Materials climbing 6.2% and Lam Research advancing 5.4% in response.
A series of encouraging economic reports supported the positive market momentum.
Weekly jobless claims dropped to a four-month low, signalling a resilient labour market, while second-quarter GDP growth was confirmed at a solid 3%, easing concerns of a broader economic slowdown.
Additionally, China's renewed stimulus measures added to the upbeat sentiment, with investors anticipating potential ripple effects across global markets.
We've talked about the outlook for a weaker dollar, driven by the recent Fed rate cut and the likelihood of a dramatic decline in U.S. real rates over the next year.
We've also discussed, a weak dollar tends to be fuel for commodity prices.
Pretty much every important commodity in the world (food, energy, metals) is priced in U.S. dollars. As such, the value of the dollar tends to have an inverse relationship with the price of commodities - that inverse correlation gives stability to global buying power.
All this comes as the bull cycle for commodities is young, and commodities prices still remain at historically extreme cheap levels relative to stocks. Add to this, commodities have gotten another tailwind this week out of China.
On Monday, the Chinese central bank unveiled the most aggressive monetary stimulus since the pandemic. It included rate cuts, support for the real estate market and direct support for the stock market.
Then midweek, the Chinese government followed that with a comprehensive plan to boost the Chinese economy - it includes about a quarter of a trillion-dollars in fiscal stimulus.
So, this is big and bold action by the Chinese government to boost the economy, reverse deflationary pressures, and appeal to foreign capital.
In a world where most major global stock markets are sitting on record highs, China becomes a "value with a catalyst" alternative- that catalyst, is the Chinese government explicitly supporting the stock market.
This is liquidity that will spill over into global markets, and stimulate global growth.
What commodity is the proxy on global growth? Copper.
What's the biggest mover on the week in global markets? Copper.
As for commodities more broadly, China has a history of stockpiling (yellow box) commodities during periods of fiscal stimulus.
