US Stocks Rally Amid Easing Middle East Tensions and Tech Earnings

US stocks soared on Monday, reversing the previous session’s steep losses, as easing Middle East tensions boosted risk appetite. The Dow Jones Industrial Average jumped 430 points, or 1.1%, to 38,417, while the S&P 500 climbed 1.4% and the Nasdaq gained 1.6%.

The Nasdaq and S&P 500 had ended lower on Friday, with Netflix shares weighing on the markets following a disappointing quarterly earnings report. However, on Monday, megacap growth stocks edged higher, with Alphabet, Amazon, and Apple up between 0.3% and 0.7%. Nvidia advanced 2.4%, rebounding from a 10% drop in the last session.

Easing tensions in the Middle East further supported the risk-on mode, as Iran’s foreign minister said the country was investigating an overnight attack, downplaying its significance and reducing concerns about potential escalation.

Equities have recently sold off as market participants adjusted their expectations for interest rate cuts by the Federal Reserve, given strong economic data indicating persistent inflation. Market participants anticipate only around 41 basis points of rate cuts this year, compared to the 150 bps expected earlier.

This week, the Federal Reserve’s preferred inflation gauge, the price consumption expenditure (PCE) index reading for March, will be closely watched to gauge the central bank’s monetary policy trajectory. Additionally, Tesla reported a 4.3% drop in its stock price, following recent price cuts in major markets, including China and Germany, while Cardinal Health fell 5.2% on news that its contracts with OptumRx would not be renewed.

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