U.S. stocks rallied on Monday after a sharp decline in oil prices eased investor concerns that the conflict involving Iran could fuel another wave of inflation, lifting major indexes even as volatility continued to grip global financial markets.
The benchmark S&P 500 gained 1.3 per cent in afternoon trading, building on momentum after a turbulent July marked by dramatic swings in energy prices and heightened geopolitical tensions. The Dow Jones Industrial Average climbed 533 points, or about one per cent, while the technology-heavy Nasdaq Composite surged two per cent, buoyed by renewed investor appetite for growth stocks.
The market rebound followed a significant drop in crude oil prices after U.S. President Donald Trump announced over the weekend that he had decided against launching fresh military strikes on Iran following appeals from regional allies.
International benchmark Brent crude fell 4.7 per cent to $83.83 per barrel, easing fears that the conflict could disrupt oil shipments through the Strait of Hormuz and trigger another spike in global energy costs.
Throughout July, Brent crude had fluctuated dramatically between $72 and $102 per barrel as investors weighed the risks of escalating conflict in the Middle East against prospects for uninterrupted crude exports through the Persian Gulf.
The easing in oil prices also pushed U.S. Treasury yields lower, providing additional support for equities. The yield on the benchmark 10-year Treasury note declined to 4.69 per cent from 4.75 per cent at Friday’s close, although it remains significantly above the 3.97 per cent level recorded before the Iran conflict intensified.
Lower Treasury yields generally reduce borrowing costs and improve the appeal of stocks by easing pressure on corporate financing and consumer spending. However, borrowing costs remain elevated, with the average long-term U.S. mortgage rate climbing to its highest level in a year.
Companies with high fuel consumption emerged among the biggest beneficiaries of falling oil prices. United Airlines jumped 5.4 per cent, while American Airlines gained five per cent as investors anticipated lower operating costs. Norwegian Cruise Line Holdings also advanced 4.6 per cent.
Tyson Foods rose two per cent after reporting quarterly earnings that exceeded analysts’ expectations. The company’s Chief Executive Officer, Donnie King, said strong demand continued to support its chicken business and prepared foods segment, which includes brands such as Jimmy Dean and Hillshire Farm.
The upbeat earnings report added to a growing list of U.S. companies outperforming Wall Street forecasts during the latest reporting season.
According to FactSet, companies listed on the S&P 500 are on course to deliver earnings per share growth of 47 per cent compared to the same period last year. If sustained, it would represent the strongest quarterly earnings expansion since the post-pandemic economic rebound in the spring of 2021.
Investor confidence also received a boost from fresh economic data showing U.S. manufacturing activity expanded at its fastest pace since 2022, signalling continued resilience in the world’s largest economy despite elevated interest rates.
Despite Monday’s rally, volatility remained pronounced, particularly among semiconductor stocks that have been at the centre of the artificial intelligence investment boom.
Micron Technology illustrated the nervous trading environment after initially falling 6.4 per cent before reversing course to post a modest gain of 0.7 per cent. The company remains up about 190 per cent this year, reflecting investor enthusiasm for AI-driven demand despite growing questions about the long-term sustainability of the sector’s rapid growth.
Technology-related volatility extended beyond the United States. South Korea’s Kospi Index, heavily influenced by semiconductor giants Samsung Electronics and SK Hynix, tumbled 5.1 per cent on Monday after soaring a record 17.9 per cent in the previous trading session.
In Japan, the Nikkei 225 slipped 0.9 per cent after the United States and Japan confirmed coordinated efforts to support the Japanese yen against the U.S. dollar. While a stronger yen could help reduce imported inflation in Japan, analysts warned it may weigh on the country’s export-dependent economy by making Japanese goods more expensive overseas.
AP
