NEW YORK, New York - U.S. stocks bounced back Thursday with all the major indices finishing in positive territory. The rally followed a two-day losing streak that saw substantial losses across the major indices. Not everyone however saw Thursday's gains as a turning point.

"For all the prevailing optimism, not all is healthy beneath the surface, suggesting caution before chasing a further market melt-up," UBS strategist Michel Lerner said in a note to clients Thursday.

He set out 4 reasons why investors and traders should be cautious:

1. "There is a wide gap between Wall Street exuberance and Main Street caution;"
2.  
3. "U.S. Valuations look rich and the marginal buyer is becoming less obvious;"
4.  
5. "The U.S. market is becoming a geared bet on AI, with uncertain payoffs;"
6.  
7. "Financial leverage to fund AI projects increases company-specific ands ystemic risks."

   The Dow Jones Industrial Average outperformed Thursday, surging 292.63 points, or 0.60 percent, to 49,442.26.

8. The benchmark S&P 500 advanced 17.89 points, or 0.26 percent, to finish at 6,944.49.

9. The NASDAQ Composite advanced 58.27 points, or 0.25 percent, closing at 23,530.02.

U.S. Dollar Strengthens Against Major Peers in Thursday Trading

The U.S. dollar posted broad gains in foreign exchange markets on Thursday, firming against several European and commodity-linked currencies amid shifting risk sentiment and interest rate expectations.

The greenback saw strength against most majors. The euro fell, with EUR/USD declining 0.34 percent to last trade at 1.1603. The British pound experienced a steeper drop, as GBP/USD slid 0.48 percent to 1.3374.

The dollar also advanced against the Japanese yen, with USD/JPY rising 0.11 percent to 158.60. The greenback gained ground against the Canadian dollar, as USD/CAD moved up 0.14 percent to 1.3897. The most pronounced gain was against the Swiss franc, where USD/CHF jumped 0.50 percent to 0.8036.

Performance was mixed among the commodity-focused Antipodean currencies. The Australian dollar managed a modest gain against the weakening greenback, with AUD/USD rising 0.24 percent to 0.6697. Conversely, the New Zealand dollar softened, as NZD/USD dipped 0.12 percent to 0.5737.

Analysts noted the dollar's strength was driven by its continued role as a safe-haven asset, coupled with market reassessments of the comparative monetary policy trajectories between the Federal Reserve and other major central banks. The euro's decline was particularly watched, reflecting ongoing economic concerns within the Eurozone.

Global Stock Markets Post Mixed Finish Thursday; European Indices Lead Gains

Stock markets around the world delivered a mixed performance on Thursday, with Canadian, UK and European bourses largely advancing while several major Asian indices closed in negative territory.

Canada's main benchmarkwas among the gainers. The S&P/TSX Composite index rose 112.45 points, or 0.34 percent, to end the session at 33,028.92.

In the United Kingdom, the benchmark FTSE 100 in London led the  gains, closing at 10,238.94, a rise of 54.59 points or 0.54 percent.

In Germany the DAX added 66.15 points to finish at 25,352.39, up 0.26 percent.

The pan-European EURO STOXX 50 performed strongly, gaining 36.09 points, or 0.60 percent, to settle at 6,041.14.

France's CAC 40 was a notable decliner in the region, slipping 17.84 points, or 0.21 percent, to 8,313.12. Conversely, Belgium's BEL 20 outperformed, jumping 47.69 points, or 0.90 percent, to 5,350.06.

The broader Euronext 100 Index closed at 1,789.92, up 0.52 percent.

Asian markets presented a more subdued picture. Hong Kong's Hang Seng Index fell 76.19 points, or 0.28 percent, to 26,923.62. In India the S&P BSE Sensex retreated 0.29 percent to 83,382.71, and Taiwan's TWSE Index declined 0.42 percent.

In Japan the Nikkei 225 dropped 230.73 points, or 0.42 percent, closing at 54,110.50.

However, gains were seen elsewhere in the Asia-Pacific. Australia's S&P/ASX 200 rose 0.47 percent to 8,861.70, and South Korea's KOSPI surged 74.45 points, or 1.58 percent, to 4,797.55.

In Singapore the STI gained 0.43 percent, and Indonesia's IDX Composite added 0.47 percent.

In the Middle Easts, Israel's TA-125 climbed 0.63 percent, and Egypt's EGX 30 rose 0.67 percent.

In Africa, South Africa's Top 40 USD Index edged up 0.28 percent.

(This report incorporates quotes retrieved with the assistance of artificial intelligence).

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