Stocks, Bonds Rise as US-Iran Hopes Spur Oil Drop: Markets Wrap
(Bloomberg) — Stocks climbed around the world, joining gains in bonds as oil fell on hopes the US and Iran will restore their diplomatic efforts after tensions in the Middle East eased.
The revival in risk appetite sent the S&P 500 higher, with the gauge also buoyed by solid corporate earnings ahead of results from a handful of megacaps. Software firms rallied on Monday, though chipmakers got hit. Brent crude dropped to $91, easing inflation concerns. Treasury yields slipped as bets on rate hikes receded in the countdown to the Federal Reserve decision.
Wall Street is finding some respite as the US and Iran held off on attacks for a third straight night. President Donald Trump is giving diplomacy “some space,” Mike Waltz, Washington’s ambassador to the United Nations, said on Sunday. Talks are “ongoing” between the sides on a technical basis and at the leadership level, he added.
“Investors responded positively to the sharp drop in the price of crude oil,” said David Morrison at Trade Nation. “Investors are hoping that this could be a precursor to a resumption in peace talks.”
The conflict, completing its fifth month, has stoked concerns of an inflationary shock that had recently rekindled wagers on higher rates this year. While some officials have suggested the Fed can be patient for now, they’ve also said the central bank may need to hike in upcoming meetings if price pressures don’t abate.
“We think the Fed will probably not hike,” said Krishna Guha at Evercore. “It would be odd to do so right after the better June inflation print given an uncomplicated path to hike in September if needed.”
Even though the Fed is expected to leave rates unchanged this week, the possibility of a hike is higher than it’s been in a while, according to Chris Larkin at E*Trade from Morgan Stanley.
“Choppy trading could persist,” he said. “This is a week with more than its fair share of potential surprises, good and bad. Geopolitics and oil prices may be the biggest wild cards, but a bullish response to strong Magnificent Seven earnings isn’t a given, especially if AI spending levels continue to raise eyebrows.”
This week’s earnings calls will no doubt be dominated by discussion on whether surging AI investment will generate sufficient returns against a still unsettled geopolitical backdrop. Suddenly it’s become difficult to please investors as spending on the technology rises.
Despite solid results last week, Alphabet Inc. tumbled in the immediate aftermath of its report after raising its capital expenditures. That makes for a tough setup heading into the upcoming earnings from Microsoft Corp. and Meta Platforms Inc. on Wednesday, followed by Apple Inc. and Amazon.com Inc.’s figures on Thursday.
Corporate Highlights:
The cost of protecting Nvidia Corp.’s debt against default surged by the most on record after reports that the chipmaker is in conversations on more than $750 billion of AI infrastructure deals. ASML Holding NV sank as The Information reported that a Chinese state-backed company has begun manufacturing immersion deep ultraviolet lithography machines. CXMT Corp. surged 466% in its Shanghai trading debut to become China’s largest onshore-listed company, as investors piled into one of the biggest AI champions. Philip Morris International Inc. is doubling investment in its Colorado Zyn manufacturing plant to shore up supply for the popular nicotine pouches that have come under threat from increased competition. Jack Daniel’s owner Brown-Forman Corp. said its board of directors rejected an unsolicited takeover offer from Sazerac Co., which asked the company to reconsider the $15 billion bid that was rebuffed earlier this year. Argenx SE agreed to buy Forte Biosciences Inc. for about $2.2 billion in cash to expand its portfolio of immunology medicines. Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 10:07 a.m. New York time The Nasdaq 100 was little changed The Dow Jones Industrial Average rose 0.9% The Stoxx Europe 600 rose 0.5% The MSCI World Index rose 0.5% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1376 The British pound was little changed at $1.3312 The Japanese yen was little changed at 163.73 per dollar Cryptocurrencies
Bitcoin rose 0.8% to $65,134.47 Ether rose 2.3% to $1,956.9 Bonds
The yield on 10-year Treasuries declined three basis points to 4.65% Germany’s 10-year yield declined four basis points to 3.13% Britain’s 10-year yield declined four basis points to 4.99% Commodities
West Texas Intermediate crude fell 6.1% to $83.84 a barrel Spot gold rose 0.6% to $4,075.23 an ounce ©2026 Bloomberg L.P.
