Key facts
- The S&P 500 index neared its all-time high, rising 1.5% on Monday.
- The Dow Jones Industrial Average reached a record high, increasing by 1.3%.
- The Nasdaq Composite gained 2.1%, moving closer to its peak.
- Brent crude oil prices dropped 5%, easing concerns about inflation.
- US President Donald Trump claimed talks with Iran were underway, though Iran denied direct negotiations.
- Tech giants, including Meta, Microsoft, and Amazon, were significant contributors to the market rally.
US stocks surged on Monday, with the S&P 500 approaching its all-time high and the Dow Jones Industrial Average setting a new record. The rally was partly fueled by a significant drop in oil prices, which eased concerns about escalating inflation.
The S&P 500 climbed 1.5 percent, leaving it just shy of its record close of 7,620.90 set on June 2. The tech-heavy Nasdaq Composite also saw substantial gains, jumping 2.1 percent and moving within 4.3 percent of its own peak. The Dow Jones Industrial Average, tracking 30 blue-chip companies, rose 1.3 percent to a record 53,178.41.
Leading the market's advance were major technology companies, often referred to as the 'Magnificent Seven.' Meta Platforms, the parent company of Facebook, saw a 6 percent increase, while Microsoft, Amazon, and Alphabet experienced gains between 4.4 percent and 4.9 percent. Chipmaker Nvidia rose 2.9 percent, and electric vehicle manufacturer Tesla gained 3.5 percent.
The market's upward movement occurred against a backdrop of conflicting signals regarding potential talks between the United States and Iran. President Donald Trump stated that negotiations were underway and that he aimed to offer Iran a final chance to reach a deal before potential renewed strikes. However, Iran's Ministry of Foreign Affairs spokesman, Esmaeil Baghaei, denied that Tehran was engaged in talks with Washington, indicating that discussions were focused on transit through the Strait of Hormuz with Oman.
Brent crude, the international benchmark for oil prices, fell approximately 5 percent on Monday before seeing a slight increase in early Asian trading on Tuesday. This decline in oil prices helped to calm market anxieties about inflation. The yield on the 10-year Treasury also fell, reflecting the easing of geopolitical concerns.
Major Asian stock markets showed mixed performance on Tuesday. South Korea's Kospi index was up 1.6 percent, while Japan's Nikkei 225 edged up 0.3 percent. Hong Kong's Hang Seng Index, however, dipped 0.6 percent.
Analysts expressed surprise at the magnitude of the rally, given the prevailing negative sentiment and lack of clear fundamental drivers. The strong performance of US equities is occurring even as companies in the S&P 500 are on track to deliver earnings per share growth of 47 percent for the spring quarter, the strongest since the spring of 2021.