The S&P 500 Index ($SPX) (SPY) on Monday closed up +0.72%, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.29%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.26%. September E-mini S&P futures (ESU26) rose +0.82%, and September E-mini Nasdaq futures (NQU26) rose +1.35%.
Stock indexes settled higher on Monday, with the S&P 500 posting a 2.5-week high and the Dow Jones Industrials posting a new all-time high. Strength in chipmakers, AI infrastructure stocks, and megacap technology companies lifted the overall market on Monday. Stocks also found support in Monday’s US economic news, which showed service sector activity continued to expand in June, albeit at a slower pace, as companies boosted payrolls amid easing cost pressures.
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The US Jun ISM services index fell -0.5 to 54.0, right on expectations. The Jun ISM services price-paid sub-index eased to 67.7 from 71.3 in May, stronger than the 67.5 expected. The Jun ISM services employment sub-index rose +3.3 to 51.2, stronger than expectations of 48.2.
Stocks and bonds also have carryover support from last Thursday’s smaller-than-expected increase in US nonfarm payrolls, which bolstered speculation that the Fed will not raise interest rates anytime soon.
The outlook for strong Q2 earnings is a bullish factor for stocks. Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by +23%, close to Q1’s blowout earnings of +30%, which was more than double the +12% analysts had expected. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2.
WTI crude oil (CLQ26) fell -0.2% on Monday as Saudi Arabia and the United Arab Emirates ramped up shipments to nearly pre-war levels. Also, OPEC+ on Sunday agreed to add 188,000 bpd to their output target, beginning August 1, in line with plans to complete the reversal of production curbs imposed a few years ago.
The markets are discounting a 25% chance of a +25 bp rate hike at the next FOMC meeting on July 28-29.
Overseas stock markets settled lower on Monday. The Euro Stoxx 50 fell from a new record high and closed down -0.23%. China’s Shanghai Composite closed down -0.06%. Japan’s Nikkei-225 Stock Average closed down -0.01%.
Interest Rates
September 10-year T-notes (ZNU6) on Monday closed up +2 ticks, and the 10-year T-note yield fell -0.6 bp to 4.477%. Sep T-notes posted modest gains on Monday amid carryover support from last Thursday’s weaker-than-expected US June payroll report, which reduces the chances of the Fed tightening monetary policy. Lower crude oil prices on Monday were also supportive of T-note prices.
Gains in T-notes were muted on Monday after the June ISM Services index expanded as expected, with the employment sub-index climbing, a hawkish factor for Fed policy. Strength in stocks on Monday also curbed safe-haven demand for T-notes. In addition, supply pressures are weighing on T-notes, as the Treasury will auction $119 billion in T-notes and T-bonds this week, beginning with a $58 billion auction of 3-year T-notes on Tuesday.
European government bond yields moved higher on Monday. The 10-year German bund yield climbed to a 2-week high of 2.949% and finished up +1.3 bp to 2.948%. The 10-year UK gilt yield rose +1.1 bp to 4.793%.
Eurozone May retail sales rose +0.2% m/m, weaker than expectations of +0.3% m/m.
The Eurozone July Sentix investor confidence index rose by +10.3 to a 4-month high of -3.1, stronger than expectations of -10.0.
German May factory orders rose +1.9% m/m, stronger than expectations of +1.1% m/m.
Swaps are discounting a 3% chance of a +25 bp ECB rate hike at its next policy meeting on July 23.
US Stock Movers
Chipmakers and AI infrastructure stocks moved higher on Monday, helping lift the overall market. The iShares Semiconductor ETF (SOXX) closed up more than +2%. Western Digital (WDC) closed up more than +7% to lead gainers in the Nasdaq 100, and Advanced Micro Devices (AMD) closed up more than +6%. Also, Seagate Technology Holdings Plc (STX) and Qualcomm (QCOM) closed up more than +5%, and ON Semiconductor (ON) closed up more than +4%. In addition, Microchip Technology (MCHP), Analog Devices (ADI), and ASML Holding NV (ASML) closed up more than +3%, and NXP Semiconductors NV (NXPI) and ARM Holdings Plc (ARM) closed up more than +2%.
Most of the Magnificent Seven technology stocks gained on Monday, a supportive factor for the broader market. Tesla (TSLA) closed up more than +6%, and Meta Platforms (META) closed up more than +2%. Also, Alphabet (GOOGL) and Apple (AAPL) closed up more than +1%, Amazon.com (AMZN) closed up +0.61%, and Nvidia (NVDA) closed up +0.40%. However, Microsoft (MSFT) bucked the trend and closed down -0.96% after announcing that its Xbox division plans to eliminate 3,200 jobs, or 20% of its workforce, over the next year.
Cybersecurity stocks rallied on Monday, a positive factor for the overall market. Okta (OKTA) closed up more than +5%, and Fortinet (FTNT) closed up more than +3%. Also, CrowdStrike Holdings (CRWD), Palo Alto Networks (PANW), Zscaler (ZS), and Cloudflare (NET) closed up more than +2%.
Dell Technologies (DELL) closed up more than +4% after President Trump posted positive comments about the company on social media.
Axon Enterprise (AXON) closed up more than +4% after Needham & Co raised its price target on the stock to $750 from $600.
Macy’s (M) closed up more than +2% after Morgan Stanley upgraded the stock to overweight with a price target of $30.
US Bancorp (USB) closed up more than +2% after Jeffries upgraded the stock to buy from hold with a price target of $75.
ZIM Integrated Shipping Services Ltd (ZIM) closed down more than -7% after Ynet reported that Israeli Prime Minister Netanyahu said the proposed sale of the company is “not on the agenda.”
O’Reilly Automotive (ORLY) closed down more than -6% to lead losers in the S&P 500 following last Thursday’s report that the company was interested in acquiring Genuine Parts Co’s auto-parts segment.
Constellation Brands (STZ) closed down more than -4% after Morgan Stanley said it sees potential Q3 demand risk for beer sales following Brazil’s and Mexico’s defeat in the World Cup on Sunday.
Brown & Brown (BRO) closed down -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $55.
JB Hunt Transport Services (JBHT) closed down more than -2% after Morgan Stanley downgraded the stock to underweight from equal weight with a price target of $200.
Earnings Reports(7/7/2026)
Enerpac Tool Group Corp (EPAC), Enovix Corp (ENVX), Kura Sushi USA Inc (KRUS), MarketAxess Holdings Inc (MKTX), Penguin Solutions Inc (PENG).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com