Markets kicked off the week with a stock market rally, driven by news of a tentative ceasefire between Israel and Iran. The S&P 500 Index ($SPX) gained +0.85%, the Dow Jones Industrial Average ($DOWI) rose +0.89%, and the Nasdaq 100 ($IUXX) surged +1.10%, marking a 4-month high for both the S&P and Nasdaq.
Investors welcomed the geopolitical reprieve, sending equity indexes higher and oil prices lower. WTI crude plummeted more than -4%, helping ease inflation concerns and boosting risk sentiment across the board.
September E-mini futures also climbed, with S&P futures (ESU25) up +0.80% and Nasdaq futures (NQU25) up +1.10%. Internationally, the Euro Stoxx 50 rose +1.42%, China’s Shanghai Composite gained +1.15%, and Japan’s Nikkei 225 added +1.14%.
Technology Leads the Stock Market Rally
Semiconductor stocks were among the biggest winners in today’s stock market rally. Investors snapped up chipmakers on positive momentum and reduced geopolitical tension.
Broadcom Inc. (NASDAQ:AVGO) led the Nasdaq 100 with a gain of over +4%. Advanced Micro Devices Inc. (NASDAQ:AMD), Micron Technology Inc. (NASDAQ:MU), and Intel Corp. (NASDAQ:INTC) each advanced more than +2%. Other standouts included Lam Research Corp. (NASDAQ:LRCX), Applied Materials Inc. (NASDAQ:AMAT), NXP Semiconductors N.V. (NASDAQ:NXPI), and Marvell Technology Inc. (NASDAQ:MRVL).
Travel and Leisure Stocks Take Off
The sharp drop in oil prices following the ceasefire gave a significant lift to airlines and cruise lines. Carnival Corp. (NYSE:CCL) surged over +9%, while Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) jumped +6%. United Airlines Holdings Inc. (NASDAQ:UAL), Delta Air Lines Inc. (NYSE:DAL), and Royal Caribbean Cruises Ltd. (NYSE:RCL) all climbed more than +4%.
These moves reflect optimism that easing tensions in the Middle East could lead to more stable travel conditions and lower fuel costs, both of which are critical for the travel sector.
Fed Caution Tempers Enthusiasm
Despite the strong stock market rally, comments from the Federal Reserve added some caution to the day’s optimism. Fed Chair Jerome Powell indicated that the central bank remains in a wait-and-see mode regarding rate cuts, saying the Fed is “well positioned to wait to learn more about the likely course of the economy.”
Atlanta Fed President Raphael Bostic echoed the sentiment, citing stable employment and expected price increases as reasons not to rush into cutting rates.
Bond yields ticked higher as a result, with the 10-year T-note yield rising to 4.359%. However, a -4% drop in oil helped ease inflation fears, limiting losses in Treasuries.
Defensive and Gold Stocks Retreat
As tensions eased, defense and gold stocks lost ground. Huntington Ingalls Industries Inc. (NYSE:HII) and Northrop Grumman Corp. (NYSE:NOC) fell more than -2%. Lockheed Martin Corp. (NYSE:LMT), General Dynamics Corp. (NYSE:GD), and L3Harris Technologies Inc. (NYSE:LHX) also declined.
Gold miners followed suit, as COMEX gold prices fell to a two-week low. Anglogold Ashanti Plc (NYSE:AU) dropped more than -5%, Gold Fields Ltd. (NYSE:GFI) lost over -4%, and Newmont Corp. (NYSE:NEM) slipped -2%.
Outlook: Will the Ceasefire Hold?
Markets will be closely watching whether the ceasefire between Israel and Iran holds. Meanwhile, economic data—including consumer confidence, Q1 GDP, and May personal income—will shape expectations for Fed policy going forward.
Although the stock market rally reflects optimism today, lingering inflation concerns and geopolitical uncertainty remain on the radar. Investors will also be tuned in to Powell’s upcoming testimony before Congress later this week for further signals on interest rates.
For now, easing geopolitical risk and strong performances in tech and travel are propelling the markets forward.
Featured Image – Freepik
