U.S. Stocks Rally Late Monday as Mega-Cap Technology Leads Gains
U.S. stocks continued to rise late Monday, with large-cap technology shares leading the advance. The Dow Jones Industrial Average approached a record high as major indexes posted strong gains on August's first trading day. Oil prices fell after President Donald Trump canceled a planned strike against Iran. The Dow rose 665.86 points, or 1.27%, to 53,150.89. The Nasdaq Composite gained 576.42 points, or 2.27%, to 25,950.27, while the S&P 500 climbed 115.52 points, or 1.54%, to 7,605.24. Communication services and technology were the main drivers of the market's advance. Meta Platforms surged nearly 6%. The source text then states that another company rose more than 4% and reached a record market capitalization of $3 trillion, but does not identify that company. It also says that Nvidia rose 3%, followed by an incomplete reference to Alphabet. Monday's move marked a sharp reversal from technology stocks' volatile performance in July. The State Street Technology Select Sector SPDR ETF (XLK) fell nearly 8% during the month as investors grew concerned about corporate spending on artificial intelligence. Large-cap technology stocks led the rally. Jade Ellerbrock, a portfolio manager at Argent Capital Management, said investors were turning bullish on technology again as corporate earnings exceeded expectations. "The market is digesting the expectation that the massive capital expenditures by the technology giants are generating attractive returns on investment," Ellerbrock said. "Semiconductor and data-center capital-spending beneficiaries doubled or more in the second quarter and then fell sharply in July, but the fundamental facts did not change throughout: Demand for accelerated computing is far greater than supply, and that gap has not narrowed." He added: "Cloud-computing giants are in a very favorable position, and semiconductors remain in a rapid-growth mode." Falling oil prices also added momentum to the market. Brent crude futures fell 5% to $83.46 a barrel. West Texas Intermediate crude futures dropped more than 7% to $78.59 a barrel. Trump said over the weekend that he had canceled a planned strike against Iran and added that talks between the two countries would resume Monday. U.S. media reported Friday that the president was preparing for another round of strikes as hopes for a negotiated end to the war faded and energy prices surged. Michael Monahan, a partner and portfolio manager at Founder ETFs, said the signal that the United States had backed away from its earlier threats against Iran may also have helped lift stocks. He added that pressure on artificial-intelligence-related shares appeared to be easing. "The pressure from the AI sell-off has disappeared, coinciding with the liquidation of 'situational awareness' last week, and most importantly, concerns about further instability in the Middle East increased before the weekend," Monahan said. "Although that concern ebbs and flows and seems to repeat every week, the tone and the big picture do seem to be saying: We will work to resolve this." Treasury yields also fell as inflation concerns eased slightly. The benchmark 10-year Treasury yield declined 6 basis points to about 4.68%. Even so, Adam Crisafulli, founder of Vital Knowledge, wrote that investors were keeping their enthusiasm in check because "we have been here before" and the conflict could still have a long way to go before a resolution is reached, if one can be reached at all. Monday was the first trading day of August, and the major indexes were seeking stability after a turbulent July. The source was published early Tuesday, August 4, Beijing time; in New York, the market event occurred late Monday, August 3.
The Dow rose 665.86 points, or 1.27%, to 53,150.89. The Nasdaq Composite gained 576.42 points, or 2.27%, to 25,950.27, while the S&P 500 climbed 115.52 points, or 1.54%, to 7,605.24.
Communication services and technology were the main drivers of the market's advance. Meta Platforms surged nearly 6%. The source text then states that another company rose more than 4% and reached a record market capitalization of $3 trillion, but does not identify that company. It also says that Nvidia rose 3%, followed by an incomplete reference to Alphabet.
Monday's move marked a sharp reversal from technology stocks' volatile performance in July. The State Street Technology Select Sector SPDR ETF (XLK) fell nearly 8% during the month as investors grew concerned about corporate spending on artificial intelligence.
Large-cap technology stocks led the rally. Jade Ellerbrock, a portfolio manager at Argent Capital Management, said investors were turning bullish on technology again as corporate earnings exceeded expectations.
"The market is digesting the expectation that the massive capital expenditures by the technology giants are generating attractive returns on investment," Ellerbrock said. "Semiconductor and data-center capital-spending beneficiaries doubled or more in the second quarter and then fell sharply in July, but the fundamental facts did not change throughout: Demand for accelerated computing is far greater than supply, and that gap has not narrowed."
He added: "Cloud-computing giants are in a very favorable position, and semiconductors remain in a rapid-growth mode."
Falling oil prices also added momentum to the market. Brent crude futures fell 5% to $83.46 a barrel. West Texas Intermediate crude futures dropped more than 7% to $78.59 a barrel.
Trump said over the weekend that he had canceled a planned strike against Iran and added that talks between the two countries would resume Monday. U.S. media reported Friday that the president was preparing for another round of strikes as hopes for a negotiated end to the war faded and energy prices surged.
Michael Monahan, a partner and portfolio manager at Founder ETFs, said the signal that the United States had backed away from its earlier threats against Iran may also have helped lift stocks. He added that pressure on artificial-intelligence-related shares appeared to be easing.
"The pressure from the AI sell-off has disappeared, coinciding with the liquidation of 'situational awareness' last week, and most importantly, concerns about further instability in the Middle East increased before the weekend," Monahan said. "Although that concern ebbs and flows and seems to repeat every week, the tone and the big picture do seem to be saying: We will work to resolve this."
Treasury yields also fell as inflation concerns eased slightly. The benchmark 10-year Treasury yield declined 6 basis points to about 4.68%.
Even so, Adam Crisafulli, founder of Vital Knowledge, wrote that investors were keeping their enthusiasm in check because "we have been here before" and the conflict could still have a long way to go before a resolution is reached, if one can be reached at all.
Monday was the first trading day of August, and the major indexes were seeking stability after a turbulent July. The source was published early Tuesday, August 4, Beijing time; in New York, the market event occurred late Monday, August 3.