Global Stocks Rally as Inflation Concerns Ease and Oil Prices Dip

Global stock markets saw gains on Monday, with U.S. indexes approaching record highs. The S&P 500 rose 0.6%, nearing its all-time high set in the summer. The Dow Jones Industrial Average added 105 points, or 0.2%, while the Nasdaq composite climbed 0.9%, setting it on track for a new record. One of the biggest movers was PTC, which surged 34% after Schneider Electric announced a $22.6 billion acquisition deal. This boosted other software stocks, with Autodesk rising 5.6%. Meanwhile, RXO jumped 21.9% following news of its acquisition by C.H. Robinson Worldwide, which fell 12.1% on the day.

Trading remained relatively subdued as investors await the start of the latest earnings season. Analysts expect nearly 30% profit growth for S&P 500 companies in the third quarter, which would mark the third straight quarter of growth above 25%. Despite lingering economic concerns, strong corporate profits have supported the market's upward trend. Oil prices, however, saw volatility due to uncertainty surrounding the Iran conflict, with Brent crude prices fluctuating between $100 and $103 before settling at $100.88, down 1.3%.

Higher oil prices have contributed to rising bond yields, with the 10-year U.S. Treasury yield climbing to 5.33% from 5.28%. Elevated yields could slow economic growth by increasing borrowing costs and reducing investor appetite for stocks. The U.S. economy continues to show strength, particularly in AI data center investments and consumer spending, though inflation remains a concern. A recent report indicated that while service sector activity grew for the 27th consecutive month, the pace was slower than expected. Additionally, input price growth accelerated, suggesting potential inflationary pressures ahead.

Wall Street anticipates at least one more Federal Reserve interest rate hike by year-end to combat inflation. The Fed raised rates last month for the first time in three years. Internationally, France's CAC 40 fell 0.8% amid concerns over government debt and budget strains, while Japan's Nikkei 225 surged 2.4% on tech stock gains.