The S&P 500, Dow Jones, and Nasdaq 100 all closed higher on Monday, with the S&P 500 and Nasdaq reaching new all-time highs, driven by strong corporate earnings and optimism surrounding artificial intelligence. Chipmakers and AI infrastructure stocks were notable leaders, with Qualcomm and Western Digital gaining over 8% and 7%, respectively. However, gains were tempered by rising oil prices and bond yields, as geopolitical tensions in the Middle East continue to escalate.

The backdrop of increasing oil prices, which rose over 2% amid stalled US-Iran negotiations, is raising inflation concerns and could pressure central banks to tighten monetary policy. The 10-year Treasury yield climbed to 4.41%, reflecting these worries. Additionally, while 83% of S&P 500 companies that reported earnings exceeded estimates, the overall earnings growth is projected to be 12% year-over-year, with a notable slowdown in sectors outside technology.

Market professionals should keep a close eye on the interplay between energy prices and monetary policy, as sustained high oil prices could lead to more aggressive rate hikes, impacting equity valuations and sector performance in the coming months.

Source: nasdaq.com