Global Stocks Rally Near Records as Inflation Worries Ease

Global stock markets showed gains on Monday, with U.S. stocks nearing record highs thanks to a pair of major buyout announcements. The S&P 500 rose 0.5%, coming within 0.5% of its all-time high set earlier in the summer. The Nasdaq composite climbed 0.8%, while the Dow Jones Industrial Average dipped 0.1%. PTC saw the biggest jump in the S&P 500, surging 34% after Schneider Electric agreed to acquire the software company for $22.6 billion. RXO also spiked 21.5% following news of its acquisition by C.H. Robinson Worldwide, which fell 13% in response.

Trading remained subdued as investors awaited the start of the latest earnings reporting season. Analysts predict nearly 30% year-over-year profit growth for S&P 500 companies in the third quarter, which would mark the third consecutive quarter of growth above 25%. Despite economic challenges, strong corporate earnings have helped stocks rally near record levels.

Oil prices fluctuated amid uncertainty over the war with Iran, with Brent crude trading between $100 and $103 before settling at $101.71, down 0.5%. High oil prices have pushed up bond yields, with the 10-year U.S. Treasury yield rising to 5.33%. Rising yields could slow economic growth by making borrowing more expensive and reducing investor appetite for stocks.

A report on Monday provided a mixed view of the U.S. economy, showing steady growth in the services sector but at a slower pace than expected. The report also indicated faster growth in prices paid by services businesses, raising concerns about future inflation. The Federal Reserve is expected to raise interest rates at least once by the end of the year to combat inflation.

Internationally, France's CAC 40 fell 0.9% due to concerns over the government's high debt and budget strains. In contrast, Japan's Nikkei 225 jumped 2.4%, driven by strong performance in technology stocks.