After a rough stretch that had investors worried about a slowdown in technology spending, Wall Street staged a sharp comeback on Monday.
The S&P 500 closed up 2.35% at 7,549.94, its best single-day gain since April 8. The Nasdaq climbed 2.74% to 25,253.14, its strongest showing since late July, while the Dow Jones Industrial Average added more than 1,100 points, a gain of roughly 2.2%. The rally was broad, with the equal-weighted version of the S&P 500 and small-cap stocks both posting strong gains alongside the mega-cap names that usually drive the headline indexes. European markets joined in too: the Stoxx Europe 600 rose 1.3%, Germany's DAX gained 1.7%, and London's FTSE 100 advanced 1%.
Two forces were behind the move. Oil prices dropped sharply, with Brent crude settling at $92.57 a barrel, down nearly 6%, after easing concerns about renewed conflict involving Iran. Lower energy costs tend to help both consumers and many businesses, and the drop coincided with a broader return of risk appetite among investors. The rally also marked a recovery from a difficult prior week, when fears about heavy spending on data centers by technology companies had weighed on the sector. On Monday, that worry gave way to a sharp rebound in chip and software stocks, with gains of roughly 5% in the semiconductor sector and over 3% in technology overall.
Not every stock joined the party. Nvidia was the notable exception, closing down about 4.3% at $178.67, its lowest close since April, as investors digested news involving its chief executive, Jensen Huang, detailed elsewhere in this briefing. Markets now turn to Tuesday's October Consumer Price Index report, the next major test of whether the rally can hold. Economists expect headline inflation to have risen 0.3% for the month, a slowdown from September's 0.6% increase, with core prices, which exclude volatile food and energy costs, forecast to rise 0.2%.
Tuesday's CPI report, released at 8:30 a.m. Eastern time, will shape expectations for the Federal Reserve's next moves on interest rates heading into December.
Why did oil prices fall so much?
Oil prices dropped as fears of renewed conflict involving Iran eased, reducing concerns about disruptions to energy supply.
What is the CPI report and why does it matter?
The Consumer Price Index measures how much prices for everyday goods and services have changed, and it is one of the main data points the Federal Reserve watches when setting interest rate policy.