To The Moon

Monday's session on Wall Street started with gains as oil prices fell following a weekend pause in hostilities between the US and Iran. Traders are also bracing for a busy week ahead, featuring earnings reports from major tech companies and a potentially surprising Federal Reserve meeting.

The Dow Jones Industrial Average opened higher by 460.36 points, or 0.89%, at 52,407.61. The Nasdaq Composite added 278.227 points, or 1.11%, to 25,254.051, while the S&P 500 rose 58.03 points, or 0.78%, to 7,470.01.

The easing of tensions in the Middle East pushed crude oil prices lower. Early Monday, September-dated Brent crude futures fell 7.7% to around $89.41 per barrel. US West Texas Intermediate crude futures dropped more than 6.3% to $83.21 per barrel. However, geopolitical strains are rising elsewhere, with Ukraine striking an Iranian merchant ship in the Caspian Sea, prompting Tehran to accuse Kyiv of "hostile and criminal actions."

The coming week presents significant challenges for major stock indices. Amazon, Apple, Meta Platforms, and Microsoft are set to report quarterly results, following a disappointing report from Alphabet last week. These outcomes will either ease or heighten investor concerns about the spending frenzy on artificial intelligence.

The earnings results could directly impact semiconductor companies, which are primary beneficiaries of the AI spending boom. "The biggest risk is in the continuation of spending," said Ken Mahoney, CEO of Mahoney Asset Management. "The question is, if they listen to shareholders and trim or slow the growth of that spending a bit, then the rest of the market won't like that either."

"So it's a bit of a seesaw effect," he added.

The Federal Reserve will announce its latest interest rate decision on Wednesday. The market widely expects the central bank to raise rates in September, but according to the CME FedWatch tool, market pricing indicates a strong possibility of a 25-basis-point hike in the benchmark borrowing rate as early as this week.

US stocks are coming off another losing week, pressured by a pullback in chip stocks and uncertainty surrounding the conflict with Iran. Last Friday, the S&P 500 and the Nasdaq fell 0.6% and 2.1%, respectively, marking their second consecutive weekly decline. The Dow Jones Industrial Average dropped 0.4%, notching its third straight weekly loss.

On the economic data front, US durable goods orders for June rose 0.3% month-over-month, compared to an estimated 1.8% increase. The forecast range from 43 economists spanned from a decline of 0.7% to a gain of 5.7%. Excluding transportation, new orders climbed 0.6% in June, following a 1.8% rise in May. Excluding defense, new orders increased 0.3% in June, after a 4.3% drop in May. Core capital goods orders, excluding aircraft and defense, rose 0.9% in June, slowing from a 1.9% increase in May. Shipments of core capital goods, excluding aircraft and defense, grew 1.9% in June, compared to a 0.2% gain in May.