The Dow Jones Industrial Average finished at a record high Monday as easing concerns over the U.S.-Iran conflict drove crude oil prices and Treasury yields lower while strong corporate earnings lifted technology shares.
By yourNEWS Media Newsroom
U.S. stocks opened August with a broad rally Monday, sending the Dow Jones Industrial Average to a record closing level as falling oil prices, lower Treasury yields and strong corporate earnings encouraged investors.
Preliminary market data showed the Dow rising 704.52 points, or 1.34%, to close at 53,189.55. The S&P 500 advanced 110.89 points, or 1.48%, to 7,600.61, while the technology-heavy Nasdaq Composite gained 539.01 points, or 2.12%, to finish at 25,912.86.
The gains followed signs that tensions between the United States and Iran could ease. President Donald Trump said Sunday that discussions with Iran over reopening the Strait of Hormuz would take place Monday, although Tehran disputed that such talks had been arranged.
Crude oil prices settled about 5% lower as traders responded to the possibility that shipping through the strategically important waterway could resume and that the conflict might not escalate further.
The decline in oil also helped pull U.S. Treasury yields lower. Investors continued assessing whether a prolonged war with Iran could increase inflationary pressures and lead the Federal Reserve to raise interest rates.
Art Hogan, chief market strategist at B. Riley Wealth in Boston, said investors were closely watching oil prices and the yield on the 10-year Treasury note for signs of how geopolitical and inflation concerns could affect equities.
“Every day, everybody wakes up and looks at the price of a barrel of oil and the yield on the 10-year, and if that’s going lower, the market’s OK, and if it’s going higher, the market’s not good whatsoever,” Hogan said.
“Typically earnings are a time that give us a chance to forget about disturbing macro influences, but this go around has not been one of those times.”
Communication services led all 11 major S&P 500 sectors, climbing more than 4% as Meta Platforms and Alphabet posted strong gains. Energy was the weakest sector, falling more than 1% as crude prices declined.
Corporate profits have remained robust during the current reporting season. Of the 304 companies in the S&P 500 that had released results through Friday, earnings were growing at a 29.3% rate, according to LSEG data.
Approximately 85.2% of those companies had exceeded analysts’ expectations.
Amazon shares rose after the company’s market capitalization surpassed $3 trillion for the first time following its earnings report last week.
SpaceX also advanced ahead of its first quarterly earnings report since becoming a public company, scheduled for Tuesday. The stock had traded below its $135 offering price for nearly three weeks following its mid-June debut.
Several other companies connected to the artificial intelligence industry are scheduled to report results this week, including Palantir Technologies, Advanced Micro Devices, SanDisk and Western Digital.
The strong Monday session followed a difficult July in which stocks faced pressure from uncertainty surrounding artificial intelligence investments, the U.S.-Iran conflict and the future course of Federal Reserve policy.
Bristol Myers Squibb shares were little changed after a report that the pharmaceutical company had entered preliminary merger discussions with AstraZeneca. A completed transaction could create one of the world’s largest drugmakers, with a combined value approaching $400 billion.
Marriott International shares declined after the hotel operator projected third-quarter earnings below analysts’ expectations.
New York Federal Reserve President John Williams said he remained optimistic that inflationary pressures would gradually ease.
Investors were also considering a report from last week that Federal Reserve Chair Kevin Warsh had raised the possibility of holding fewer interest-rate-setting meetings, adding to concerns that markets could receive less frequent guidance from the central bank.
Financial markets were pricing in a 66.5% probability that the Fed would raise interest rates by at least 25 basis points at its September meeting, according to CME FedWatch.
Attention will now turn to a series of labor-market reports scheduled for release during the week. The data will culminate Friday with the federal government’s monthly employment report, which could influence expectations for the Fed’s next policy decision.
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