Stocks, Bonds Rise as US-Iran Hopes Spur Oil Drop: Markets Wrap
(Bloomberg) — Stocks joined bonds higher as cooling tensions in the Middle East spurred a drop in oil prices, allaying worries about inflation.
A revival in risk appetite, which was also fueled by solid earnings, drove the S&P 500 toward its highest since early June. Both small caps and megacaps climbed. Amazon.com Inc.’s value topped $3 trillion. US crude sank below $80. Treasury yields fell after last week’s intense volatility.
Iran suggested negotiations to get more ships moving through the Strait of Hormuz are making progress, after President Donald Trump called off what he said was a major attack on the Islamic Republic.
“The geopolitical landscape is once again setting the agenda for the macro outlook and providing solace for dip buyers,” said Ian Lyngen at BMO Capital Markets.
Still, the on-again, off-again nature of US-Iran diplomacy could mean earnings and jobs data will have to do the heavy lifting for the bulls this week, according to Chris Larkin at E*Trade from Morgan Stanley.
In the countdown to a slew of jobs figures, data showed US manufacturing activity expanded in July at the fastest pace in more than four years as demand remained strong, production surged and firms added workers.
Labor-market data and earnings will determine whether stocks can build on last week’s resilience, according to Mark Hackett at Nationwide.
“The market absorbed the Federal Reserve, earnings, inflation, and a significant rotation in leadership without breaking down,” he said. “After spending much of the summer in wait-and-see mode, the market may be laying the groundwork for its next breakout.”
Momentum-style equity investing is poised to rebound from a sharp retreat as sectors with strong earnings replace chip stocks in leading gains, Morgan Stanley strategist Michael Wilson noted.
After one of the “worst momentum selloffs in history,” Wilson said the style is rotating toward so-called quality shares with a stable earnings history.
Corporate Highlights:
AstraZeneca Plc has explored an acquisition of Bristol-Myers Squibb Co., according to people familiar with the matter, in a potential megadeal that would rank as the largest ever in pharma. Northrop Grumman Corp. has secured agreements worth as much as $3 billion to supply key components for missile interceptors produced by Lockheed Martin Corp., part of a broader effort to boost output of munitions drawn down by the Iran war. Marriott International Inc. said that room growth for 2026 would likely come in at the lower end of earlier guidance, driven by construction delays in the Middle East. AMC Entertainment Holdings Inc. generated its highest-ever total weekend revenue, driven by the opening of Spider-Man: Brand New Day. Tyson Foods Inc. cut its annual profit outlook, signaling that any relief for the US beef industry from a historic cattle shortage is still a long way off. What Bloomberg strategists say…
“Chairman Kevin Warsh’s limited guidance on the Fed’s reaction function means upcoming data, oil prices and the bond market will have a greater influence on the market’s expectations for the policy path.”
—Michael Ball, Macro Strategist, Markets Live. For the full analysis, click here.
Some of the main moves in markets:
Stocks
The S&P 500 rose 1.3% as of 12:20 p.m. New York time The Nasdaq 100 rose 1.6% The Dow Jones Industrial Average rose 1% The MSCI World Index rose 1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.2% to $1.1506 The British pound fell 0.4% to $1.3427 The Japanese yen rose 0.3% to 156.87 per dollar Cryptocurrencies
Bitcoin rose 0.6% to $63,791.25 Ether fell 0.9% to $1,865.31 Bonds
The yield on 10-year Treasuries declined five basis points to 4.69% Germany’s 10-year yield declined five basis points to 3.15% Britain’s 10-year yield declined 10 basis points to 4.95% Commodities
West Texas Intermediate crude fell 5.9% to $79.70 a barrel Spot gold fell 0.2% to $4,036.44 an ounce ©2026 Bloomberg L.P.
