Wall Street gains as lower oil prices ease inflation concerns
U.S. stocks rallied on Monday, moving close to record highs as falling oil prices helped reduce concerns that inflation could accelerate further.
The S&P 500 gained 1.5%, ending just 0.1% below its all-time high reached earlier this summer. The move followed a volatile July, when markets reacted to sharp swings in oil prices linked to the conflict with Iran before finishing the month relatively unchanged.
The Dow Jones Industrial Average climbed 693 points, or 1.3%, reaching a record high, while the Nasdaq Composite advanced 2.1% as technology stocks recovered.
Lower oil prices support market recovery
The main driver behind Monday’s gains was a sharp decline in crude oil prices. Brent crude fell 4.7% to $83.77 per barrel after President Donald Trump said he had decided to delay additional strikes against Iran following requests from regional allies.
Oil prices fluctuated between $72 and $102 per barrel during July as investors monitored whether the conflict with Iran would disrupt shipping routes through the Persian Gulf. The latest developments eased concerns about global oil supplies and contributed to lower bond yields.
The yield on the 10-year U.S. Treasury note declined to 4.68% from 4.75% late Friday, although it remains significantly above the 3.97% level recorded before the conflict began.
Higher bond yields can pressure stock valuations by increasing borrowing costs for consumers and businesses. Mortgage rates have already climbed to their highest level in a year, adding pressure to the housing market.
Airlines and fuel-sensitive companies lead gains
Companies affected by energy costs benefited from the decline in oil prices. United Airlines shares rose 5.8%, while American Airlines gained 5%. Norwegian Cruise Line Holdings also advanced 6.6%.
Boeing jumped 8% after U.S. regulators approved its 737 MAX-7 aircraft for commercial service.
Tyson Foods also moved higher, gaining 2.8% after reporting stronger-than-expected quarterly results. CEO Donnie King highlighted continued strength in the company’s chicken operations and prepared food brands, including Jimmy Dean and Hillshire Farm.
Strong corporate earnings support investor confidence
The positive results from major companies added confidence to a market that had faced concerns over stretched valuations.
According to FactSet, companies in the S&P 500 are on track to report second-quarter earnings per share growth of 47% compared with the same period last year. More than half of the companies in the index have already released results.
If that growth rate holds, it would represent the strongest earnings expansion since the second quarter of 2021, when the economy was recovering strongly from the COVID-19 pandemic.
Additional support came from economic data showing that U.S. manufacturing activity accelerated to its strongest pace since 2022.
AI chip stocks remain volatile
Despite the broader market gains, semiconductor stocks continued to experience significant volatility as investors questioned whether the artificial intelligence boom can justify the industry’s rapid growth and investment levels.
Concerns remain that if AI delivers lower-than-expected productivity gains or profitability, major technology companies could reduce spending on data centers, affecting demand for advanced chips.
Micron Technology, for example, moved between losses and gains during the session before closing 0.8% higher. The stock remains up approximately 190% so far this year.
Global markets show mixed performance
The S&P 500 gained 110.78 points to close at 7,600.50, narrowly missing its record closing high of 7,609.78. The Dow Jones Industrial Average rose to 53,178.41, while the Nasdaq Composite climbed to 25,913.90.
Asian markets experienced more mixed results as investors continued to monitor technology valuations and currency movements.
South Korea’s Kospi index dropped 5.1% following a record 17.9% surge on Friday. The index has been particularly sensitive to movements in artificial intelligence-related stocks due to the influence of major chipmakers Samsung Electronics and SK Hynix.
Japan’s Nikkei 225 declined 0.9% after the United States and Japan confirmed coordinated efforts to support the yen. A stronger yen could help reduce inflation pressures in Japan but may create challenges for exporters.
