Major indexes begin the week at record levels
U.S. stocks climbed sharply on Monday as investors welcomed a proposed end to the war with Iran and continued buying shares of newly listed SpaceX.
The gains opened a holiday-shortened trading week with record levels for the Dow Jones Industrial Average and strong momentum across the broader market.
Dow closes above 51,600
The Dow advanced 468.77 points, or 0.92%, to finish at a record 51,671.03.
The index of 30 major companies also reached a new intraday high during the session, supported by improving geopolitical sentiment and falling energy prices.
Nasdaq posts its strongest day in months
The S&P 500 rose 1.65% to close at 7,554.29.
The technology-heavy Nasdaq Composite surged 3.07% to 26,683.94, recording its strongest performance since March 31.
Growth and technology shares benefited from expectations that easing oil prices could reduce inflation and limit the need for further interest-rate increases.
SpaceX extends its post-IPO rally
SpaceX shares gained nearly 20% on Monday after rising 19% during the company’s public-market debut on Friday.
The continued advance suggested that investors were adding the stock as a long-term portfolio holding rather than treating it as a short-lived speculative trade.
Brian Mulberry, chief market strategist at Zacks Investment Management, said trading appeared more orderly than he had expected and showed few signs of the rapid turnover commonly associated with meme stocks.
Trump says Iran agreement is complete
President Donald Trump announced late Sunday that an agreement with Iran had been completed.
Pakistan Prime Minister Shehbaz Sharif said the memorandum of understanding would be formally signed in Switzerland on Friday.
A senior U.S. administration official said the document had already been signed electronically.
Earlier violence had threatened the agreement
The announcement followed renewed uncertainty caused by an exchange of fire between Israel and Hezbollah, the Iran-backed group operating in Lebanon.
The confrontation had raised doubts over whether negotiations could be concluded, but the subsequent confirmation of the framework restored investor confidence.
Hormuz reopening sends crude lower
Trump also authorized the reopening of the Strait of Hormuz, one of the world’s most important routes for oil and liquefied natural gas shipments.
U.S. crude fell approximately 4.9% and settled at $80.75 per barrel as traders anticipated a recovery in shipping and energy supplies.
Vice President JD Vance said he expected the waterway to remain open without tolls over the long term.
Oil decline changes the inflation outlook
The fall in crude prices offered relief after the war had pushed energy costs higher and intensified concerns about inflation.
Mulberry said the move below important levels in both oil prices and bond yields suggested that markets were taking the agreement seriously.
Lower oil costs could reduce pressure on businesses and consumers while limiting the risk that higher transport and production expenses spread across the economy.
Refined fuel prices may take longer to fall
Although crude has declined rapidly, products such as petrol, diesel and jet fuel may respond more slowly.
Refineries, distributors and transport companies generally require time to pass lower raw-material costs through to customers.
Even so, crude returning to around $80 per barrel represents a meaningful shift from the elevated levels reached during the conflict.
Federal Reserve pressure begins to ease
The market rally comes during a week in which the Federal Open Market Committee is expected to provide new guidance on interest rates.
Mulberry said the decline in energy prices strengthened the argument that the Federal Reserve may not need to raise rates.
If inflationary pressure eases quickly, policymakers could maintain current borrowing costs rather than tightening monetary policy further.
Investors embrace a less threatening outlook
Monday’s gains reflected the combination of strong enthusiasm for SpaceX and optimism that the Iran agreement could remove a major source of risk from global markets.
The durability of the rally will depend on whether the deal is formally signed, whether the Strait of Hormuz reopens safely and whether energy prices remain lower.
For now, investors are betting that reduced geopolitical tension will support corporate earnings, ease inflation and give the Federal Reserve more room to avoid another rate increase.
