US stocks continued to climb in late trading on Monday, driven higher by large-cap technology firms, with the Dow Jones Industrial Average approaching its record high. Major indexes surged on the first trading day of August. Oil prices fell after President Donald Trump canceled a planned strike against Iran.
The Dow rose 665.86 points, or 1.27%, to 53,150.89 points. The Nasdaq gained 576.42 points, or 2.27%, to 25,950.27 points. The S&P 500 climbed 115.52 points, or 1.54%, to 7,605.24 points. The communication services and technology sectors were the primary drivers of the market's upward momentum.
Meta Platforms surged nearly 6% on the day. Amazon also rose more than 4%, reaching a record market capitalization of $3 trillion. Meanwhile, Nvidia gained 3%, while Alphabet and Microsoft each added approximately 5%. Monday's rally marks a sharp reversal from the volatile performance of tech stocks in July, during which the State Street Technology Select Sector SPDR ETF (XLK) tumbled nearly 8% as investors worried about corporate spending on artificial intelligence.
Large-cap tech stocks led the advance. Jed Ellerbroek, portfolio manager at Argent Capital Management, noted that as corporate earnings beat expectations, investors are once again turning bullish on tech shares. "The market is pricing in the expectation that the massive capital expenditures by tech giants are generating attractive returns on investment," Ellerbroek said. "Stocks benefiting from semiconductor and data center capital spending doubled or more in the second quarter, then fell sharply in July, but the fundamental fact hasn't changed throughout the process: the demand for accelerated computing far exceeds supply, and that gap hasn't narrowed." He added, "Cloud computing giants are in a very strong position, and semiconductors remain in a rapid growth phase."
Falling oil prices also added momentum to the market. International Brent crude oil futures dropped 5% to $83.46 per barrel. West Texas Intermediate crude futures slid more than 7% to $78.59 per barrel. Over the weekend, Trump stated he had canceled a planned strike against Iran, adding that negotiations between the two countries would resume on Monday. Last week, US media reported that, as hopes for a negotiated end to the war diminished and energy prices surged, the president was preparing for a new round of strikes.
Michael Monahan, partner and portfolio manager at Founder ETFs, suggested that signals the US had backed down from its earlier threat against Iran could also be boosting stocks, alongside signs that pressure on AI-related stocks is easing. "The pressure from the AI sell-off has dissipated, coinciding with the liquidation of 'situational awareness' positions last week, and then most importantly, concerns over further instability in the Middle East increased before the weekend," Monahan said. "Although this worry ebbs and flows, seemingly repeating every week, the tone and overarching narrative do seem to be saying: we'll try to resolve this."
Treasury yields also fell as concerns about inflation eased slightly. The benchmark 10-year Treasury note yield declined 6 basis points to around 4.68%. Despite this, Adam Crisafulli, founder of Vital Knowledge, wrote that investors are still keeping their enthusiasm in check because "we've seen this before," and the conflict likely has a long way to go before a resolution is reached—if one is achieved at all.
Monday marked the first trading day of August, with major indexes seeking to stabilize after a turbulent July.
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