US stock indexes surged on Monday, extending a broad rally led by megacap technology and growth-oriented names. The S&P 500 closed up 1.48% to mark a two-month high, while the Dow Jones Industrial Average gained 1.32% and the Nasdaq 100 rose 1.78%, reaching a 1.5-week high. Futures also pointed higher into the next session, with September E-mini S&P futures up 1.49% and September E-mini Nasdaq futures up 1.77%.
Traders attributed the gains to easing geopolitical risk in the Middle East and a sharp drop in crude oil, which helped reduce inflation fears. The slump in oil weighed on bond yields—data cited by the article showed the 10-year Treasury yield fell about 5 basis points to 4.68%—supporting equities as rate-sensitive sectors found renewed demand.
Key takeaways
- Price move: The S&P 500 rose 1.48%, the Dow added 1.32%, and the Nasdaq 100 climbed 1.78%, each finishing at a recent multi-day high.
- Catalyst: Oil prices fell sharply on signs of easing Middle East tensions, lowering inflation expectations and dragging Treasury yields lower.
- Macro drivers: The July ISM manufacturing index increased to 55.6, while a separate data point—June construction spending—declined unexpectedly.
- Earnings support: Expectations for second-quarter earnings growth and a reported higher-than-expected proportion of companies beating estimates helped underpin risk appetite.
- Implication for investors: With markets pricing near-term central-bank decisions, continued moves in crude and yields may remain a key determinant of equity direction.
What drove the rally
According to the article, equities gained momentum as tensions in the Middle East appeared to cool. WTI crude oil dropped more than 5% on Monday, with the piece citing developments including efforts toward reopening the Strait of Hormuz corridor and reports that planned actions related to Iran were called off. By lowering the near-term inflation outlook, the oil selloff helped shift market focus back to fundamentals such as earnings momentum.
On the US economic calendar, the report pointed to a stronger manufacturing read. The July ISM manufacturing index rose 2.3 points to 55.6, exceeding expectations of 53.9 and marking the fastest expansion pace in four years, a combination that tends to reinforce revenue expectations for industrial and cyclical segments.
Not all data came in firm. The article said June construction spending fell 0.1% month over month versus expectations for a 0.2% increase, a reminder that parts of the economy remain uneven even when manufacturing looks better.
Policy commentary also helped. The report said New York Fed President John Williams offered dovish remarks, indicating rates were well positioned and that inflation should ease during the second half of the year—an outlook that generally supports both bond prices and equity valuation multiples.
Market reaction in rates and sectors
With crude sliding, the article noted lower bond yields. The 10-year Treasury yield fell about 5 basis points to 4.684% on Monday, and the report attributed the move partly to reduced inflation expectations. It also cited a US Treasury policy allowing Japan to use the Foreign and International Monetary Authorities Repo Facility, described as enabling the Bank of Japan to access dollars using Treasury holdings as collateral rather than selling bonds in the open market.
European government bond yields also declined, according to the article. The 10-year German bund yield fell about 5.4 basis points to 3.152%, while the 10-year UK gilt yield dropped about 9.7 basis points to 4.953%.
Sector leadership reflected the macro transmission from yields to growth. The report said the “Magnificent Seven” complex rose broadly, excluding Apple. Meta Platforms finished up more than 6%, while Amazon, Microsoft, and Alphabet each ended up more than 4%; Tesla gained more than 3% and Nvidia rose more than 2%. Those moves helped lift the broader market given the weight of large-cap growth stocks in major index benchmarks.
Energy and related groups moved lower on the oil drop. The article said major names including Diamondback Energy, Occidental Petroleum, Phillips 66, and Marathon Petroleum each fell more than 2% or around that magnitude, while several other oil and service stocks were also down.
The oil selloff translated into a rally in travel stocks as well. According to the piece, airline and cruise operators rose as crude fell, with Norwegian Cruise Line up more than 6% and American, United, and Alaska Air each closing up more than 5%.
Earnings outlook and individual movers
The report pointed to earnings momentum as another pillar for Monday’s advance. According to Bloomberg Intelligence data referenced in the article, second-quarter earnings are projected to rise about 23%, near the strong 30% growth reported for the first quarter and well above the 12% analysts had expected. The piece also highlighted that AI spending is expected to contribute a large share of S&P 500 earnings-per-share growth in the quarter, with AI infrastructure stocks contributing nearly 60% of the index’s projected EPS growth.
Near-term earnings results also appeared to be tracking positively in the article’s accounting. It said 86% of the 311 S&P 500 companies that had reported second-quarter results through Monday beat estimates, based on Bloomberg data.
Among notable single-stock developments included a jump in Atkore, which the article said gained more than 28% after Prysmian agreed to acquire the company for 3.8 billion, or about $95 per share. The report also cited several analyst-driven moves: Boeing rose more than 8% after BNP Paribas reportedly upgraded the stock to outperform from underperform, and Ferguson Enterprises gained more than 6% after S&P Dow Jones Indices announced it would replace Electronic Arts in the S&P 500 ahead of the August 5 open.
Other headlines were mixed. GameStop shares declined more than 12% after it announced plans to exchange about $1.4 billion in convertible senior notes for shares of its common stock with certain existing shareholders, while Marriott International fell more than 6% after the article said second-quarter revenue missed consensus.
Bigger picture: what the market is pricing
The article said markets are discounting a 66% chance of a 25 basis point rate increase at the next Federal Open Market Committee meeting on September 15–16. For Europe, it cited pricing for an ECB move on September 10, stating there was an 88% chance of a 25 basis point hike.
Overseas, the report described mixed outcomes: the Euro Stoxx 50 rose to a new all-time high and finished up 1.08%, while China’s Shanghai Composite closed down 0.59% and Japan’s Nikkei 225 fell 0.94%.
Looking ahead, investors will likely focus on whether oil’s decline persists and how it continues to influence Treasury yields and inflation expectations. With multiple earnings and data releases scheduled across the week, including a broad slate of company reports listed in the article for August 4, the next moves in rates and guidance could determine whether Monday’s rally holds into the coming sessions.
