Wall St starts the month strong as Mideast deal hopes rise

By Johann M Cherian and Shashwat Chauhan

Aug 3 (Reuters) – Wall Street’s main indexes rose over 1% each on the first trading day of August as signs of de-escalating U.S.-Iran tensions dragged down crude prices, while investors prepared for another week packed with earnings and economic data.

Most megacap and growth stocks gained, with Amazon.com rising 5.3% to cross $3 trillion in market value for the first time.

U.S. President Donald Trump said on Sunday that talks with Iran to reopen the Strait of Hormuz would take place sometime on Monday, though Iran contradicted him. Brent crude prices slid 6% while the yield on the two-year Treasury note dipped 3.3 basis points.

Seven of the 11 S&P sectors advanced, led by communications services. Alphabet and Meta rebounded 4.7% and 6.7%, respectively, from steep declines in July.

Apple, on the other hand, shed 1.6%.

Amazon and Microsoft’s earnings last week alleviated some concerns about the lack of evidence of any payoff from elevated AI spending, but investors will be keen on how other major names fare.

“All the hyperscalers are continuing to spend money and are increasing the amount of capital expenditures. So I think investors are looking to see what’s the return on investment and corresponding growth in various revenue areas,” Chris Zaccarelli, chief investment officer for Northlight Asset Management, said.

AI neocloud companies such as Nebius and CoreWeave gained over 13% each.

SpaceX, which on Tuesday will report its first quarterly results since going public, advanced 2.3%. The stock has been trading below its $135 offering price for nearly three weeks.

Other AI-linked companies reporting this week include Palantir, Advanced Micro Devices as well as data storage companies SanDisk and Western Digital.

At 11:44 a.m. ET the Dow Jones Industrial Average rose 553.78 points, or 1.06%, to 53,038.81, the S&P 500 gained 91.12 points, or 1.22%, to 7,580.84 — both near record levels. The Nasdaq Composite jumped 474.51 points, or 1.87%, to 25,848.37. 

Wall Street had a rough July due to global concerns about the AI trajectory, future interest rates and the U.S.-Iran conflict.

Chip stocks, which were a drag last month, were mixed on Monday, with the Philadelphia chips index down 0.1%. Micron lost 1.9% after Reuters reported that Chinese rival CXMT is considering a second memory-chip plant in Beijing.

Traders also weighed a potential consolidation in the healthcare sector after a report said Bristol Myers Squibb and AstraZeneca held preliminary merger talks. A deal could form one of the world’s biggest drugmakers, worth nearly $400 billion. The U.S. company’s shares gave up early gains to trade down 0.4%.

Hotel operator Marriott International fell 7.2% after forecasting third-quarter profit below expectations.

New York Federal Reserve President John Williams expressed optimism on Monday that inflation pressures would ease gradually. Late last week, a report that U.S. Fed chair Kevin Warsh raised the idea of scheduling fewer rate-setting meetings — in line with his plan to reduce Fed rate guidance — added to uncertainties.

The week is also packed with several labor market reports, including the official nonfarm payrolls figures due on Friday. 

Advancing issues outnumbered decliners by a 2.59-to-1 ratio on the NYSE and by a 2.98-to-1 ratio on the Nasdaq. 

The S&P 500 posted 14 new 52-week highs and one new low while the Nasdaq Composite recorded 106 new highs and 67 new lows.

(Reporting by Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Joyjeet Das)