US stocks rallied on Monday, with the Dow Jones Industrial Average closing at a record high as investors welcomed news of a preliminary agreement between the United States and Iran and continued to embrace SpaceX following its blockbuster public market debut.
The Dow gained 490.38 points, or 0.96%, to close at 51,684.88.
The S&P 500 advanced 1.67% to 7,555.26, while the Nasdaq Composite surged 3.07% to 26,686.64, marking its strongest daily gain since March 31.
The three major indexes recorded a third consecutive session of gains, recovering from a recent pullback driven by Middle East tensions and weakness in artificial intelligence-related stocks.
Iran deal hopes send oil prices lower
Investor sentiment improved after President Donald Trump announced that an agreement with Iran was “now complete.”
Pakistan Prime Minister Shehbaz Sharif said the memorandum of understanding is expected to be formally signed in Switzerland on Friday, while a senior US administration official said the agreement has already been signed electronically.
The framework aims to end the conflict between the United States and Iran and reopen the Strait of Hormuz, a critical route for global oil shipments.
However, the agreement does not address issues including Iran’s nuclear program and the conflict involving Israel and Hezbollah in Lebanon.
The prospect of renewed oil flows from the Middle East pushed energy prices sharply lower.
US crude futures settled down 4.9% at $80.75 per barrel, their lowest level since March.
Lower oil prices boosted investor confidence that inflation pressures could ease, reducing the likelihood of higher interest rates.
SpaceX extends gains after blockbuster IPO
Another major focus for investors remained SpaceX, which continued its strong performance following Friday’s highly anticipated Nasdaq debut.
Shares of the Elon Musk-led company climbed more than 19% on Monday, repeating the 19% gain during its first day of trading.
The company entered public markets with a valuation exceeding $2 trillion, making it one of the largest publicly traded companies in the United States.
Investors appeared encouraged by the orderly nature of the stock’s debut despite widespread attention surrounding the offering.
The successful launch has also strengthened optimism surrounding the broader IPO market, with investors anticipating future public offerings from major artificial intelligence companies later this year.
Technology stocks lead gains ahead of Fed meeting
Technology shares were among the strongest performers as lower oil prices helped ease concerns about inflation and interest rates.
The Philadelphia Semiconductor Index moved sharply higher, supported by gains in Nvidia and Micron Technology.
Micron rose after multiple brokerages increased their price targets on the stock.
Airline and cruise operators also benefited from lower fuel costs.
United Airlines advanced, while Norwegian Cruise Line and Carnival gained as investors responded to the decline in crude prices.
Meanwhile, market participants continued to focus on the Federal Reserve’s upcoming policy meeting, the first chaired by Kevin Warsh since he succeeded Jerome Powell.
Investors widely expect policymakers to leave interest rates unchanged this week.
According to CME Group’s FedWatch tool, traders are pricing in a 42% probability of a 25-basis-point rate increase by year-end.
The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, declined for a third straight session, reflecting improving market sentiment as geopolitical tensions eased and investors returned to risk assets.
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