Oil Price Drop Fuels Wall Street Rally Amid De-escalation in Middle East Conflict

Wall Street closed sharply higher on Monday to start August trading due to a decline in crude oil prices following the de-escalation of the Middle East war. President Donald Trump announced the cancellation of a planned attack on Iran, stating that 'We have just been asked by Iran, and other Middle Eastern Countries, to hold off any attack in that the perimeters of a deal has been agreed to.'

The decline in crude oil prices led to lower market risk-free returns, which is favorable for growth sectors like technology. AI trade rebounded from last month's volatility, with stocks of major AI hyperscalers like Meta Platforms Inc., Amazon.com Inc., Alphabet Inc., and Microsoft Corp. climbing between 4.6% to 6%. The tech-heavy Nasdaq Composite finished at 25,913.90, climbing 2.1% or 540.04 points.

The Institute of Supply Management reported that the manufacturing purchasing managers' index (PMI) for July came in at 55.6, its best monthly reading since May 2022. Strong economic data boosted market participants' sentiment, contributing to the positive performance of all three major stock indexes.