The U.S. stock market reached new all-time highs on Monday, fueled by a resurgence in artificial intelligence enthusiasm and comments from former President Donald Trump indicating that negotiations with Iran are actively progressing.
Optimism that a potential conflict with Iran could be resolved diplomatically helped propel the S&P 500 index to around 7600 points. This marked the benchmark's eighth consecutive day of gains, representing its longest winning streak since May 2025.
Technology stocks led the market's advance.
NVIDIA (ASX: NVDA)
NVIDIA's share price rose 6.3%. The company announced plans to enter the personal computer market with a new chip, aiming to challenge Intel's long-standing dominance in that sector.
Software stocks also moved higher after NVIDIA's CEO, Jensen Huang, downplayed concerns that the software industry could be disrupted by more advanced AI tools. The iShares Expanded Tech-Software Sector ETF recorded its best two-day performance since 2001.
IBM (ASX: IBM)
IBM's stock price surged. The rally was partly attributed to the renewed circulation online of a video, filmed nearly six months ago, in which former President Trump praised the company's chief executive.
Financial markets continue to experience volatility in response to geopolitical developments. Escalating cross-border fire in Lebanon in recent days had threatened indirect talks between Washington and Tehran regarding a ceasefire extension. Earlier on Monday, Iran stated it would pause negotiations with the U.S. in protest of Israeli military actions in Lebanon.
"Expectations for a U.S.-Iran agreement remain highly uncertain," stated strategists Jason Pride and Michael Reynolds. "Recent military strikes and conflicting statements from both sides indicate that key details are still unresolved."
They added that while an eventual deal seems probable over time, the situation in the Strait of Hormuz remains fragile. The trajectory of energy prices will continue to play a crucial role in shaping the near-term outlook for inflation and interest rates.
U.S. manufacturing activity expanded in May at its fastest pace in four years. The Institute for Supply Management's manufacturing index indicated that producers' raw material costs continued to rise significantly, with the gauge remaining near its highest level since 2022.
Combined with a renewed uptick in oil prices, this report has intensified market speculation that the Federal Reserve's next interest rate move could be an increase.
At the close of trading, the S&P 500 index was up 0.3% at 7,599.96 points.
The Dow Jones Industrial Average gained 0.1% to finish at 51,078.88 points.
The Nasdaq Composite Index advanced 0.4% to 27,086.81 points.
The Nasdaq 100 Index rose 0.6% to 30,513.86 points.
The Russell 2000 Index declined 0.5% to 2,905.762 points.
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