NEW YORK / RankWire.AI / – On Monday, U.S. equities experienced a surge, driven by gains in major Tech stocks and a significant drop in oil prices. The Dow Jones Industrial Average climbed by 693.38 points, or 1.32%, reaching a new record close of 53,178.41. Meanwhile, the S&P 500 increased by 1.48% to settle at 7,600.50, just shy of its all-time high. The Nasdaq Composite led the gains among primary indexes, rising 2.13% to 25,913.90. The market’s upward momentum marked a broad-based rally that started August with widespread gains across both large-cap and small-cap stocks.
Technology and communication services stocks contributed significantly to the overall advance. Notably, Meta Platforms and Alphabet played a major role in boosting the S&P 500 communication services sector by 4.3%, the strongest performance among the 11 sectors. Amazon’s stock rose 4.6%, pushing its market value beyond $3 trillion for the first time following its quarterly earnings report. Additionally, an exchange traded fund that tracks seven top technology firms increased nearly 4%, reflecting strong investor demand for leading growth stocks.
The decline in crude oil prices also helped bolster the market. Brent crude futures settled down 4.7% at $83.77 per barrel, after President Donald Trump announced that the United States would delay any new strikes against Iran. Trump also indicated that negotiations might include reopening the Strait of Hormuz, though Iran disputed the scheduling of any talks. The drop in oil prices eased immediate inflationary concerns and contributed to lower Treasury yields during the session. Energy shares, however, fell 1.2%, making the sector the weakest performer of the day.
Drop in oil prices alleviates market concerns
The yield on the benchmark 10-year Treasury note decreased to approximately 4.68%, down from late Friday levels. This decline in yields reduced borrowing costs for growth-oriented companies, which often see their valuations fluctuate significantly with interest rate changes. The Federal Reserve continued to be a focal point for investors, especially after recent inflation worries and rising energy costs. New York Federal Reserve President John Williams commented that inflation pressures should gradually ease. Bond prices rose as yields declined, while traders awaited further labor market data to guide their expectations.
The upward market movement extended beyond major technology firms. The Russell 2000 index, representing smaller companies, gained 1.7% to reach 2,981.91. Advancing stocks outnumbered decliners by a ratio of 2.62 to 1 on the New York Stock Exchange and 3.01 to 1 on the Nasdaq. Trading volume reached 19.36 billion shares, surpassing the 20-day average of 17.66 billion. The S&P 500 registered 15 new 52-week highs and one new low, indicating broad market strength.
Corporate Earnings Support Market Rally
Earnings reports from companies added further support to the market’s advance. Out of 304 S&P 500 companies that reported through Friday, quarterly earnings growth averaged 29.3%. About 85.2% of these firms exceeded analysts’ expectations, according to market data provider LSEG. SpaceX saw its stock jump 5.6% ahead of its first quarterly report as a public entity. In contrast, Marriott International declined 7% after forecasting a profit below expectations for the third quarter.
The Dow’s record-setting close helped solidify a positive start to August after a challenging July for various market segments. Technology stocks faced headwinds related to artificial intelligence spending, rising interest rates, and geopolitical tensions involving the U.S. and Iran. Monday’s gains brought the S&P 500 within 0.1% of its peak, with the Nasdaq also extending its upward trend. Year-to-date, the Dow has risen 10.6%, the S&P 500 has gained 11%, and the Nasdaq has increased by 11.5%.