US stocks surged Monday as investors breathed a collective sigh of relief following reports that peace talks between the United States and Iran were gaining traction after a weekend of military strikes. The combination of easing geopolitical tensions, a historic reshuffle of the Dow Jones Industrial Average, and a blockbuster corporate announcement from Comcast sent stocks sharply higher to kick off a holiday-shortened week.
What Moved Markets
The Dow Jones Industrial Average climbed 306.63 points, or 0.59%, to close above 52,000 for the very first time, settling at 52,182.74. The S&P 500 gained 1.18% to close at 7,440.43, while the Nasdaq Composite led the charge with a 2.07% advance, ending at 25,820.14.
The primary catalyst was a de-escalation of the US-Iran conflict that had rattled markets all of last week. Over the weekend, the US launched strikes on Iranian military targets after Tehran carried out attacks along the Strait of Hormuz. Reports on Monday that peace talks were underway reversed the damage, with oil prices pulling back from their anxiety-driven highs and risk appetite returning to equity markets. The S&P 500 and Nasdaq had each fallen sharply the prior week – down nearly 1.2% and 4.6% respectively – making Monday’s rebound a meaningful recovery.
Adding fuel to the tech-driven rally, Alphabet officially joined the Dow Jones Industrial Average on Monday, replacing another blue-chip component in the 30-stock index. The addition made waves on its first day, with Alphabet shares rising more than 4% and pulling the Dow to its first ever close above 52,000.
Notable Movers
Comcast (CMCSA) was the day’s biggest story outside of the indices, surging roughly 21% after the cable giant announced plans to spin off NBCUniversal and Sky into a separate, independent publicly traded company. The tax-free separation would create one firm built around Comcast’s core cable, wireless and business services, and another housing Universal’s theme parks, film and TV studios, NBC broadcast network, the Peacock streaming service, and European media giant Sky. The deal is expected to close in approximately one year.
Microsoft (MSFT) jumped 5.71% to close at 372.97, and Apple (AAPL) gained 3.14% to 283.78, as the broader tech sector snapped back from last week’s losses. Amazon (AMZN) rose 2.50% to 232.69, benefiting from the same risk-on sentiment that lifted most of the growth-oriented names that had sold off hard during the Iran scare.
ON Semiconductor (ON) was the session’s biggest loser among notable names, tumbling 23.66% to 90.65. Bloom Energy (BE) dropped 18.49% to 252.02 as investors rotated out of alternative energy names. On the positive side, Moderna (MRNA) climbed 12.59% to 67.27, continuing its strong run as biotech stocks attracted fresh buying interest.
NVIDIA (NVDA) was a notable laggard in an otherwise robust tech session, falling 1.64% to 192.53. The chipmaker has been under pressure in recent sessions and did not participate in Monday’s broad semiconductor recovery.
Looking Ahead
With the July 4th holiday falling on Saturday this year, the government has moved the June jobs report to Thursday – giving investors a crucial read on the labor market one day earlier than expected. That report will be the week’s defining event, especially as the Federal Reserve watches employment data closely when assessing whether to adjust interest rates. Investors will also keep a close eye on whether the US-Iran ceasefire holds, as any renewed hostilities could quickly reverse oil prices and weigh back on equities. The second quarter earnings season begins in earnest in the second week of July, with analysts projecting S&P 500 earnings growth of roughly 22% for the quarter – the second straight period of 20%-plus growth. For now, the bulls have momentum, but geopolitical news flow and Thursday’s jobs number will set the tone for the rest of the shortened week.