Wall Street saw a significant rally in stocks and bonds, primarily driven by strong earnings reports from major tech companies and optimism surrounding a potential US-Iran deal. The S&P 500 rose 0.7%, and the Nasdaq 100 gained 0.6%. A gauge of the Magnificent Seven megacaps climbed 3%, with Amazon.com Inc.'s value topping $3 trillion after its cloud-computing unit recorded its fastest quarterly revenue growth since 2021. Amazon's stock jumped over 15% following upbeat Q2 results and a $50 billion investment in OpenAI, while other tech giants like Alphabet gained nearly 7%, and Microsoft and Meta rose about 3%.
Contributing to the market's positive momentum was a sharp decline in oil prices. US crude sank below $80 per barrel, with WTI crude slumping more than 6%. This drop was triggered by hopes of a US-Iran deal, as Iranian officials suggested negotiations to allow more ships through the Strait of Hormuz were in their final stages. This easing of Middle East tensions allayed worries about faster inflation, leading to a fall in Treasury yields, with the 10-year T-note yield decreasing by five basis points to 4.69%.
Despite the overall positive trend, the rally was selective. Apple's stock slumped over 7% after providing disappointing guidance, citing chip supply constraints, softer demand in China, and limited visibility for the iPhone. Materials, information technology, and healthcare sectors finished among the weakest. Analysts like Chris Larkin at E*Trade from Morgan Stanley noted that while falling oil provides an early boost, the fluctuating nature of US-Iran diplomacy means earnings and jobs data will be crucial for sustained market performance. Investors are also keenly awaiting the upcoming US jobs report and other labor market data to assess the outlook for interest rates.
