The S&P 500 Index ($SPX) (SPY) on Monday closed up +1.65%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.92%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +3.06%. June E-mini S&P futures (ESM26) rose +1.68%, and June E-mini Nasdaq futures (NQM26) rose +3.06%.
Stock indexes settled sharply higher on Monday, with the S&P 500 and Nasdaq 100 posting 1-week highs, and the Dow Jones Industrial Average hitting a new record high. Crude oil prices and global bond yields tumbled on Monday, sparking risk-on sentiment and boosting equity markets after the US and Iran agreed to end their war and reopen the Strait of Hormuz. President Trump said the Strait of Hormuz will reopen after the signing of the peace deal on Friday in Switzerland, which will trigger the start of 60 days of talks on Iran’s nuclear program. However, if an agreement isn’t reached on nuclear, the US could restart military attacks.
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Gains in technology stocks led the overall market higher on Monday. Also, airline stocks rose as the slump in crude oil lowers fuel costs, and metal prices and mining stocks rallied as the drop in oil prices is dovish for the world’s central banks.
On the downside, falling crude prices weighed on energy producers. Also, Monday’s weaker-than-expected US economic reports on the June Empire manufacturing survey, May manufacturing production, and the June NAHB housing market index were bearish for stocks.
The US Jun Empire manufacturing survey of general business conditions fell -13.9 to 5.7, weaker than expectations of 13.7.
US May manufacturing production was unchanged m/m, weaker than expectations of +0.3% m/m.
The US Jun NAHB housing market index unexpectedly fell -2 to 35, weaker than expectations of no change at 37.
WTI crude oil prices (CLN26) fell more than -4% on Monday to a 3-month low on news of the end of the US-Iran war and the reopening of the Strait of Hormuz. The plunge in oil prices has eased inflation expectations and lowered global bond yields. The 10-year T-note yield dropped to a 1-month low of 4.42% on Monday.
The markets are discounting a 4% chance of a +25 bp rate hike at the next FOMC meeting on June 16-17.
Overseas stock markets settled higher on Monday. The Euro Stoxx 50 rose to a new record high and closed up +0.68%. China’s Shanghai Composite climbed to a 1.5-week high and closed up +1.61%. Japan’s Nikkei-225 Stock Average surged to a new all-time high and closed up +4.99%.
Interest Rates
September 10-year T-notes (ZNU6) on Monday closed up +4.5 ticks, and the 10-year T-note yield fell -1.6 bp to 4.463%. Sep T-notes rallied to a 1-month high on Monday, and the 10-year T-note yield dropped to a 1-month low of 4.418%. Monday’s -4% plunge in WTI crude oil to a 3-month low lowered inflation expectations and is bullish for T-notes. Also, Monday’s weaker-than-expected US economic reports were supportive for T-notes. Gains in T-notes were limited as Monday’s sharp stock market rally dampened safe-haven demand for government debt securities.
European government bond yields moved lower on Monday. The 10-year German bund yield tumbled to a 2-week low of 2.944% and finished down -4.1 bp to 2.954%. The 10-year UK gilt yield dropped to a 1.75-month low of 4.767% and finished down -2.4 bp to 4.812%.
Eurozone Apr industrial production rose +0.1% m/m, right on expectations.
ECB Governing Council member Martins Kazaks said, “The ECB raised the inflation forecast quite significantly, but the risks in my view are still on the upside for inflation,” so the ECB is ready to take further action to stop the rise in energy prices from spreading to the rest of the economy.
Swaps are discounting an 18% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmakers and AI infrastructure stocks rose on Monday, helping support gains in the broader market. The iShares Semiconductor ETF (SOXX) rose more than +5% on Monday to a new record high. Western Digital (WDC) closed up more than +15% to lead gainers in the S&P 500 and Nasdaq 100, and Marvell Technology (MRVL) closed up more than +11%. Also, Micron Technology (MU) closed up more than +10%, and Seagate Technology Holdings Plc (STX) closed up more than +8%. In addition, ARM Holdings Plc (ARM) closed up more than +7%, and Advanced Micro Devices (AMD) and Lam Research (LRCX) closed up more than +6%. Finally, SanDisk (SNDK) and Microchip Technology (MCHP) closed up more than +5%, and Qualcomm (QCOM) and Texas Instruments (TXN) closed up more than +4%.
The Magnificent Seven technology stocks rallied on Monday as the end of the US-Iran war has sparked risk-on sentiment in asset markets. Meta Platforms (META) closed up more than +4%, and Amazon.com (AMZN) and Nvidia (NVDA) closed up more than +3%. Also, Alphabet (GOOGL) and Microsoft (MSFT) closed up more than +2%, and Apple (AAPL) closed up more than +1%. In addition, Tesla (TSLA) closed up +0.74%.
Airline stocks and cruise line operators are rallying today as the -5% plunge in WTI crude lowers fuel costs and boosts the profitability prospects for the companies. Royal Caribbean Cruises (RCL) closed up more than +6%, and United Airlines Holdings (UAL), Carnival (CCL), Alaska Air Group (ALK), Norwegian Cruise Line Holdings (NCLH), and American Airlines Group (AAL) closed up more than +3%. In addition, Delta Air Lines (DAL) and Southwest Airlines (LUV) closed up more than +1%.
Mining stocks moved higher on Monday as gold, silver, and copper prices rallied sharply. Coeur Mining (CDE) and Hecla Mining (HL) closed up more than +8%, and Anglogold Ashanti (AU) closed up more than +6%. Also, Newmont Corp (NEM) closed up more than +5%, and Barrick Mining (B) closed up more than +4%. In addition, Freeport McMoRan (FCX) closed up more than +2%, and Southern Copper (SCCO) closed up more than +1%.
Cryptocurrency-exposed stocks gained on Monday as the price of Bitcoin (^BTCUSD) rose more than +4% to a 1.5-week high. Coinbase Global (COIN) closed up more than +6%, and Strategy (MSTR) closed up more than +5%. Also, MARA Holdings (MARA) closed up more than +3%, and. Riot Platforms (RIOT) closed up more than +2%.
Delivery and rideshare service stocks settled higher on Monday as gasoline prices tumbled to a 2-month low. DoorDash (DASH) closed up more than +11%, and Uber Technologies (UBER) and Lyft (LYFT) closed up by more than +5%. Also, Grab Holdings Ltd (GRAB) closed up by more than +4%, and Maplebear (CART) closed up by more than +2%.
Energy stocks and service providers retreated on Monday as WTI crude oil fell more than -4% to a 3-month low. APA Corp (APA) closed down more than -6%, and Marathon Petroleum (MPC), SLB Ltd (SLB), Exxon Mobil (XOM), ConocoPhillips (COP), and Valero Energy (VLO) closed down more than -4%. Also, Chevron (CVX) closed down more than -3% to lead losers in the Dow Jones Industrials, and Phillips 66 (PSX), Occidental Petroleum (OXY), Haliburton (HAL), and Devon Energy (DVN) closed down more than -3%.
Space Exploration Technologies (SPCX) closed up more than +19% on positive carryover from its record $75 billion initial public offering (IPO) late last week, which was more than four times oversubscribed, indicating strong demand for the stock.
Datadog (DDOG) closed up more than +1% after Truist Securities upgraded the stock to buy from hold with a price target of $300.
Hawkeye 360 Inc (HAWK) closed up more than +5% after Jeffries upgraded the stock to buy from hold with a price target of $34.
Elicio Therapeutics (ELTX) closed down more than -72% after it said its Phase 2 study of its vaccine to treat patients with pancreatic cancer did not meet the pre-specified primary endpoint.
Fox Corp (FOXA) closed down more than -16% to lead losers in the S&P 500 after paying $22 billion to acquire Roku.
Old Dominion Freight Line (ODFL) closed down more than -3% to lead losers in the Nasdaq 100 after Citigroup downgraded the stock to sell from neutral with a price target of $228.
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On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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