The Dow Jones Industrial Average surged 693 points to a record 53,178.41 on Monday as Big Tech rallied and oil prices tumbled after President Donald Trump called off planned strikes on Iran. The S&P 500 rose 1.48% to 7,600.50, while the Nasdaq 100 climbed 1.78% to 28,776.80.
The Dow Jones Industrial Average surged 693 points to a record 53,178.41 on Monday as Big Tech rallied and oil prices tumbled after President Donald Trump called off planned strikes on Iran. The S&P 500 rose 1.48% to 7,600.50, within striking distance of its own record, while the Nasdaq 100 climbed 1.78% to 28,776.80.
"The scale of the move is staggering — on Monday alone the S&P 500 added $1 trillion in market capitalization," said Kathleen Brooks, research director at XTB UK. "Real money is ploughing back into US stocks after the recent shake-out."
Brent crude fell about 5% to $83.75 a barrel, and US oil prices dropped 5% to $80, as the de-escalation of US-Iran tensions eased supply concerns. The 10-year Treasury yield slipped 5 basis points to 4.68%, relieving pressure after last week's surge following the Federal Reserve meeting. The euro weakened toward 1.1500 against the dollar as the greenback strengthened on easing geopolitical risk.
Investors piled back into beaten-down tech names, with Microsoft up 5%, Alphabet gaining 4%, Amazon rising 4% to a record $3 trillion valuation, and Nvidia adding 2%. Meta jumped 6.5%, and SanDisk climbed 5%. Even SpaceX rose 1.8% after Elon Musk called the stock an "insane buy" below $110, a day before its first earnings report since listing on the Nasdaq in June.
Energy stocks lagged as crude prices fell, while defensive sectors and healthcare names saw outflows as capital rotated into large-cap growth. Traders and hedge funds bought US tech stocks at their fastest pace in five weeks, according to XTB data, suggesting the selloff that ran from June 22 through the end of July has run its course.
The rally has a fundamental basis. Blended S&P 500 earnings growth is running at 47.4% year over year, the highest rate since Q2 2021, with 86% of companies beating estimates and 10 of 11 sectors reporting growth. Even excluding outsized beats from Alphabet and Amazon, earnings growth stands at 28.8%. The index's relative valuation versus the MSCI World Index, based on forward price-to-earnings ratios, has fallen below its long-term average after six weeks of underperformance.
The AI trade is making a broad-based comeback, with the Magnificent 7 rallying alongside chip stocks. Hyperscalers are increasing capital expenditure, adding to the recovery in the AI infrastructure trade. The massive deleveraging seen in recent weeks appears to be behind the market, with real money returning to US equities as the second quarter progresses.
The rotation back into US tech could come at the expense of European and UK stocks, where defensive sectors and energy names may see continued outflows. The next test comes Friday, when the July payrolls report could shift expectations for a September rate hike. A strong print would boost the case for tighter policy, while renewed US-Iran hostilities remain a tail risk for oil prices and equity valuations.
This article is for informational purposes only and does not constitute investment advice.
