A powerful stock market rally is unfolding as major U.S. indexes push into uncharted territory. On Monday, the S&P 500 Index ($SPX) rose 0.54%, the Dow Jones Industrial Average ($DOWI) gained 0.41%, and the Nasdaq 100 Index ($IUXX) jumped 0.72%, with all three riding the wave of falling bond yields and renewed enthusiasm for tech and earnings.
Falling Yields Lift Stocks
The key driver behind today’s stock market rally is a sharp drop in Treasury yields. The 10-year U.S. Treasury note yield slid 6 basis points to 4.36%, a one-week low. September 10-year T-note futures (ZNU25) also rallied, reaching a one-week high.
Lower yields typically boost equities by reducing borrowing costs and making stocks more attractive relative to bonds. This environment especially benefits growth and tech stocks, many of which are priced based on future earnings.
Adding fuel to the rally, Federal Reserve Governor Christopher Waller recently expressed support for a possible rate cut at the July 29–30 FOMC meeting, further easing concerns about high borrowing costs.
Chip Stocks Supercharge the Tech Sector
Semiconductor stocks are once again powering the Nasdaq. ARM Holdings Plc (NASDAQ:ARM) led the way, climbing over 3%. Other notable gainers included:
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GlobalFoundries (NASDAQ:GFS)
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ON Semiconductor (NASDAQ:ON)
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NXP Semiconductors (NASDAQ:NXPI)
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Qualcomm (NASDAQ:QCOM)
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Broadcom (NASDAQ:AVGO)
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Lam Research (NASDAQ:LRCX)
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Intel (NASDAQ:INTC)
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Advanced Micro Devices (NASDAQ:AMD)
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Applied Materials (NASDAQ:AMAT)
This rally in chipmakers underscores their critical role in the AI and tech boom that continues to reshape markets.
Corporate News Sparks Further Optimism
Beyond tech, several individual stocks are helping drive the broader stock market rally. Notably:
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Block Inc. (NYSE:SQ) soared over 7% after news broke that it will replace Hess Corp in the S&P 500 Index, a move expected to bring more institutional investment into the stock.
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Verizon Communications (NYSE:VZ) gained more than 4% after it raised the lower end of its full-year earnings forecast.
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Domino’s Pizza (NYSE:DPZ) rose 2% after reporting better-than-expected Q2 revenue.
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Equinix Inc. (NASDAQ:EQIX) jumped over 2% after activist investor Elliott Investment Management disclosed a stake and pushed for value-enhancing actions.
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Pinterest (NYSE:PINS) rose more than 2% following a Morgan Stanley upgrade to “Overweight” with a $45 price target.
Trade Tensions Linger in the Background
Despite the strong momentum, not all news is positive. Investors remain cautious over escalating trade tensions, particularly as former President Donald Trump announced sweeping new tariffs:
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30% tariffs on goods from the EU and Mexico starting August 1
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35% tariffs on select Canadian imports
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A steep 50% tariff on copper imports
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Potential 200% tariffs on pharmaceutical imports unless production is relocated to the U.S.
These developments introduce new uncertainty into the global supply chain and could spark retaliation, although markets appear to be brushing off these risks—at least for now.
Market Outlook: Earnings in Focus
Roughly 20% of S&P 500 companies are scheduled to report Q2 earnings this week, including Alphabet (NASDAQ:GOOGL) and Tesla (NASDAQ:TSLA) on Wednesday. So far, earnings have been better than expected, with Bloomberg Intelligence reporting +3.2% earnings growth, beating initial projections of +2.8%.
However, only six of eleven S&P sectors are projected to show year-over-year profit growth—the lowest since Q1 2023—highlighting the uneven nature of this stock market rally.
Final Thoughts: Stock Market Rally Looks Resilient
Between falling yields, strong tech leadership, and promising earnings reports, the stock market rally shows few signs of slowing. Barring unexpected geopolitical or economic shocks, investor sentiment remains bullish heading into the heart of earnings season.
With monetary policy potentially easing, and tech continuing to outperform, equities appear well-positioned for further gains in the weeks ahead.
With key earnings still to come and the potential for a rate cut on the horizon, investors will be watching closely. If economic data stays stable and corporate profits hold up, this stock market rally could continue into the fall. For now, momentum favors the bulls as optimism outweighs uncertainty.
