U.S. stock index futures and major benchmarks traded mixed-to-higher on Monday, with the Nasdaq 100 leading gains as chipmakers and artificial-intelligence infrastructure names outperformed. At the same time, crude oil eased after OPEC+ agreed to raise its output target and as Saudi Arabia and the United Arab Emirates increased shipments, helping pull down bond yields and supporting broader risk sentiment.
Oil’s slide also fed into expectations for inflation and interest rates, following carryover support from last Thursday’s smaller-than-expected U.S. nonfarm payrolls report, which bolstered the view that the Federal Reserve is unlikely to tighten policy soon. Overseas markets were generally softer, adding to a selective tone in global equities.
Key takeaways
- Price moves: The S&P 500 rose about 0.43%, the Nasdaq 100 gained about 1.17%, while the Dow edged down around 0.04%.
- Catalyst: Strength in semiconductor and AI infrastructure stocks, alongside lower crude oil prices after OPEC+ production plans.
- Rates link: The 10-year Treasury yield fell (10-year T-note yields down roughly 2 basis points), reflecting easing inflation expectations.
- Earnings outlook: Expectations for strong second-quarter earnings growth supported equities, according to Bloomberg Intelligence estimates.
- Implication: Investors appear to be pricing near-term rate risk lower while rotating into AI-related sectors, even as some software names lagged.
What drove the move
Market gains in the U.S. were led by the semiconductor complex and companies tied to AI infrastructure. The AI trade received additional momentum from the earnings backdrop: Bloomberg Intelligence-compiled forecasts (as cited by the report) indicate second-quarter earnings could rise about 23%, compared with a much stronger first-quarter print of roughly 30% and expectations of about 12% prior to that.
Against that backdrop, oil prices declined, with WTI down roughly 0.5% while remaining above last Thursday’s 4.25-month low. The move reflected a combination of accelerating oil flows through the Strait of Hormuz and OPEC+ agreement on Sunday to increase its crude output target, effective August 1. The supply plan was in line with efforts to complete the reversal of production curbs implemented a few years ago, while rising shipments from Saudi Arabia and the UAE added pressure on prices.
Lower crude fed directly into the rates complex. The report said the 10-year Treasury yield was down about 2 basis points to roughly 4.46%, as reduced inflation expectations helped support bond prices.
Market reaction across rates and equities
In the U.S. rates market, September 10-year Treasury futures were up modestly, and the 10-year T-note yield fell to about 4.464% in the report. The selloff in crude provided a short-term tailwind for Treasuries, while the carryover effect from the weaker-than-expected June payrolls report also supported the view that the Fed may not need to raise rates soon.
The bond market also faced supply considerations, with the report noting that the Treasury is set to auction $119 billion in Treasuries and Treasury bonds this week, beginning with a $58 billion auction of 3-year notes on Tuesday. Those issuance expectations can influence the pace of gains in duration-sensitive assets.
Across sectors, the report highlighted a split in leadership. Chipmakers and AI infrastructure names rose broadly, lifting sentiment toward the technology supply chain. A range of individual gainers were cited, including storage and semiconductor-related names, while cybersecurity stocks also rallied—an additional positive signal for parts of the technology complex.
Software stocks, however, lagged. The report said Workday and Intuit were lower, and large-cap software names such as Microsoft, Adobe, Autodesk and Salesforce also declined, trimming the upside for the broader market.
Overseas and macro signals investors are watching
International markets were generally soft. The report said the Euro Stoxx 50 slipped from its record high, while China’s Shanghai Composite finished slightly lower and Japan’s Nikkei 225 closed marginally down.
In Europe, the report pointed to mixed bond performance and selected economic releases, including Eurozone retail sales that rose 0.2% month over month versus expectations of 0.3%, and a higher-than-forecast increase in the Sentix investor confidence index. Germany’s factory orders were also reported stronger than expected. In currency and policy terms, the report said swaps were pricing roughly a 3% chance of a 25 basis point ECB rate hike at its next meeting.
For the U.S., the report said markets were discounting about a 24% chance of a 25 basis point rate hike at the next FOMC meeting on July 28–29. That pricing aligns with the day’s broader pattern: falling oil prices supported the bond market, and softer labor data from last week helped temper expectations for immediate tightening.
What to watch next
Investors will likely focus on whether crude prices can stabilize after OPEC+’s output decision and continued Middle East supply flows, as that remains tightly linked to inflation expectations and Treasury yields. With the next steps for global equities tied to earnings momentum and rate expectations, attention will also turn to upcoming U.S. Treasury auctions and the schedule of macro data leading into the late-July FOMC meeting.
