Wall Street opened August with a powerful rally on Monday, as the Dow Jones Industrial Average surged approximately 693 points, or 1.3%, to close at a fresh record high. The S&P 500 advanced 1.5%, approaching its early-June peak, while the Nasdaq Composite jumped 2.1%, driven by a broad rebound in technology shares and a sharp drop in crude oil prices.
Tech stocks lead the charge
The session marked a decisive reversal from July's tech-led selloff, which had been fueled by concerns over heavy AI infrastructure spending, Federal Reserve policy uncertainty, and geopolitical tensions. This time, stronger-than-expected corporate earnings helped restore confidence that massive investments in artificial intelligence are beginning to pay off. According to LSEG data, of the 304 S&P 500 companies that reported through Friday, aggregate profit growth came in at 29.3% year over year, with 85.2% beating analyst estimates.
Communication services was the standout sector, climbing more than 4%, while technology shares also posted solid gains. Meta Platforms rose nearly 6%, and both Alphabet and Microsoft added around 5%. Nvidia advanced about 3%, extending its recovery as investors rotated back into AI-related names. Amazon gained more than 4%, pushing its market capitalization above the $3 trillion mark for the first time after last week's robust earnings report, which highlighted accelerating growth in Amazon Web Services.
Other AI-linked companies, including Palantir, Advanced Micro Devices, SanDisk, and Western Digital, remain in focus as the earnings season continues this week. The positive sentiment also lifted SpaceX, which traded higher ahead of its first quarterly earnings report since its public listing.
Oil slides as Middle East tensions ease
Adding to the risk-on mood, crude oil prices tumbled after President Donald Trump announced that planned military strikes against Iran had been called off and that discussions between the two countries would resume. Although Iran disputed that talks were scheduled, the prospect of reduced tensions alleviated concerns about potential supply disruptions. Brent crude settled about 5% lower near $83.46 per barrel, while West Texas Intermediate declined more than 7% to around $78.59 per barrel.
The drop in oil prices also helped ease inflation worries, pushing Treasury yields lower. The benchmark 10-year yield fell about six basis points to around 4.68%. Energy stocks lagged the broader market, making the sector the weakest performer of the session as declining crude weighed on oil producers.
Investors await jobs data and Fed signals
Attention now turns to a busy week of economic releases and corporate earnings that could shape expectations for monetary policy. Investors are awaiting several labor market reports, including Friday's closely watched nonfarm payrolls data, for additional clues on the health of the US economy. Markets are currently pricing in a 66.5% probability of at least a 25-basis-point Federal Reserve rate increase in September, according to CME FedWatch data.
As the week progresses, traders will also monitor earnings from other major companies, including Tesla's recent rebound and Serve Robotics' pre-earnings surge. The Dow's 640-point gain on Monday underscores the market's renewed optimism, though some caution remains over memory stock oversupply fears.
This article is for informational purposes only and does not constitute financial advice.
