Dow, Nasdaq Soar as Trump Halts Iran Attack, Oil Crashes Below $80

Mumbai, August 3: In a dramatic turn of events that sent shockwaves through global financial markets, US stock indices opened significantly higher on the first trading day of August after President Donald Trump announced the cancellation of planned military strikes against Iran. The Nasdaq Composite surged 191.46 points to reach 25,565.31, while the Dow Jones Industrial Average climbed 609.72 points to 53,094.75, as oil prices plunged nearly 7% following renewed diplomatic overtures between Washington and Tehran. 

Nasdaq Climbs 0.75% to 25,565 as Tech Sector Shows Mixed Performance 

The tech-heavy Nasdaq Composite opened at 25,452.66, well above its previous close of 25,373.85, and touched an intraday high of 25,607.92 in early trading. The index’s upward momentum was driven primarily by robust gains among major technology giants, although semiconductor stocks exhibited significant weakness. Microsoft emerged as a standout performer, surging 5.22%, while Amazon jumped 5.29%, contributing substantially to the index’s positive movement. 

The Nasdaq’s trading volume reached 2.3 billion shares in the initial hours, with the index establishing a daily range between 25,420.35 and 25,607.92. The 52-week range for the Nasdaq currently spans from 20,690.25 to 27,190.21, indicating the index remains well within its historical trading band despite recent volatility. The average daily volume for the index stands at approximately 9.7 billion shares, suggesting a relatively subdued trading start for August. 

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However, the semiconductor sector presented a contrasting picture, with several chipmakers experiencing sharp declines. Western Digital tumbled 5.70%, while Seagate Technology plunged 6.58%, reflecting continued investor concerns about the sustainability of AI-driven hardware demand. ARM Holdings fell 5.71%, and Monolithic Power Systems declined 4.67%, indicating that the recent AI stock correction may not yet be complete despite the broader market rally. 

Dow Jones Surges 1.16% to 53,094 as Blue-Chip Stocks Lead Rally 

The Dow Jones Industrial Average demonstrated remarkable strength, advancing 609.72 points to 53,094.75, building on its previous close of 52,485.03. The index opened at 52,759.06 and touched an intraday high of 53,165.78, approaching its 52-week peak of 53,289.30. The rally was broad-based, with significant contributions from technology and industrial components. 

Microsoft led the Dow’s advance with a 5.22% gain, while Amazon added 5.29%, underscoring the outsized influence of technology giants on the blue-chip index. Salesforce climbed 4.02%, and Boeing rose 3.67%, reflecting renewed confidence in the aerospace sector following the easing of geopolitical tensions. Home Depot advanced 2.71%, and Disney gained 2.23%, indicating strength across consumer cyclical segments. 

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Trading volume for the Dow reached 66.3 million shares in early trading, well below the average volume of 537.7 million shares, suggesting that market participation remained measured despite the positive sentiment. The index’s daily range extended from 52,759.06 to 53,165.78, with the 52-week range between 43,724.02 and 53,289.30 highlighting the substantial recovery from earlier market lows. 

S&P 500 Advances 0.65% to 7,538 as Energy Stocks Weigh Amid Oil Collapse 

The benchmark S&P 500 index gained 48.46 points to reach 7,538.18, building on its previous close of 7,489.72. The index opened at 7,504.78 and established a daily trading range between 7,504.78 and 7,544.06, approaching its 52-week high of 7,620.90. Trading volume for the S&P 500 reached 250.5 million shares, significantly below the average volume of 5.6 billion shares, indicating cautious investor participation. 

Technology stocks provided substantial support to the index, with Microsoft advancing 5.29% and Oracle climbing 4.83%. However, energy stocks experienced sharp declines, with Exxon Mobil and Chevron both falling 1.62% as oil prices plummeted following the diplomatic breakthrough. Semiconductor names also weighed on the index, with Micron Technology declining 5.41% and Advanced Micro Devices falling 3.78%. 

The S&P 500’s 52-week range extends from 6,271.71 to 7,620.90, suggesting the index remains within striking distance of its historical peak despite recent volatility. The broad-based nature of the rally was evident across multiple sectors, with consumer discretionary and healthcare names posting solid gains. The index’s performance reflected a delicate balance between easing geopolitical concerns and ongoing uncertainty in the technology and energy sectors. 

Crude Oil Plunges Below $80 as Trump Calls Off Iran Attack, Announces Talks 

West Texas Intermediate crude futures tumbled nearly 7% to $78.93 per barrel, while Brent crude declined approximately 6% to $82.95 per barrel, following President Trump’s announcement that he had cancelled planned military strikes against Iran. The president revealed via Truth Social that Middle Eastern countries, including Saudi Arabia, Qatar, and the United Arab Emirates, had requested the halt of any attack, citing progress toward a potential deal to reopen the Strait of Hormuz. 

Trump disclosed that negotiations with Iran would resume on Monday, with the president stating aboard Air Force One that “the reason they asked [to call off the attack] is they think there’s a deal.” He indicated that an agreement on the Strait of Hormuz would potentially lead to broader discussions on denuclearisation. The development reversed weeks of escalating tensions that had pushed oil prices higher following Iran’s missile attack on a US base in Jordan. 

The oil price collapse provided significant relief to inflation-weary markets, with the benchmark 10-year Treasury yield falling 7 basis points to approximately 4.67%. The drop in yields reflected diminished inflation expectations, as lower energy prices reduce input costs across the economy. However, analysts cautioned that the diplomatic breakthrough remains tentative, with Iranian media subsequently denying any agreement on reopening the strategic waterway. 

US Treasury Yields Slide as Geopolitical Premium Unwinds From Bond Market 

The benchmark 10-year Treasury yield declined 7 basis points to 4.67% as investors unwound the geopolitical premium that had built into bond markets during the height of US-Iran tensions. The move lower in yields followed the sharp decline in oil prices, which reduced concerns about inflation and the potential for supply-driven price pressures. The two-year Treasury yield also moved lower, trading at 4.25%, reflecting shifting expectations regarding Federal Reserve policy. 

The yield curve dynamics suggested that markets were pricing in a 64.5% likelihood of the Federal Reserve hiking interest rates during its September meeting, according to CME Group’s FedWatch tool. This represented a modest reduction from previous probabilities, as lower oil prices eased some of the pressure on policymakers to maintain a restrictive stance. The 30-year Treasury yield remained elevated at 5.27%, highlighting ongoing concerns about long-term inflationary pressures. 

Bond market movements reflected the complex interplay between geopolitical developments and monetary policy expectations. The reduction in yields provided support for equity valuations, particularly in the technology sector, which tends to be more sensitive to interest rate movements. However, the persistence of elevated long-term yields suggested that structural inflationary pressures remained a concern for fixed-income investors. 

AstraZeneca Plunges 7.8% Following $400bn Bristol-Myers Squibb Merger Talks 

AstraZeneca shares tumbled 7.81% in early trading, erasing approximately £986 per share from its valuation, following reports that the UK pharmaceutical giant was in merger talks with US rival Bristol-Myers Squibb. The Financial Times reported that the potential tie-up would create a combined drugmaker valued at nearly $400 billion, representing one of the largest pharmaceutical mergers in history. Bristol-Myers Squibb shares conversely rose more than 5% on the news of the potential combination. 

The reports indicated that the companies had discussed a merger in recent months, although concerns about potential political pushback and competitive overlap in cancer treatments could derail the negotiations. AstraZeneca declined to comment on the report, while Bristol-Myers Squibb did not immediately respond to requests for comment. The potential merger would give AstraZeneca greater access to the US market following its New York Stock Exchange listing in February. 

The pharmaceutical sector showed mixed reactions to the news, with Eli Lilly gaining approximately 1.5% after announcing that the FDA had granted Breakthrough Therapy designation for its pancreatic cancer drug olomorasib. The designation, which accelerates the path to approval, came ahead of Lilly’s second-quarter earnings report scheduled for Wednesday. The divergence in pharmaceutical stocks highlighted the sector’s sensitivity to both M&A activity and regulatory developments. 

Magnificent Seven Stocks Power Ahead as Amazon, Microsoft Post Strong Gains 

Amazon and Microsoft led the Magnificent Seven stocks higher, with both companies advancing more than 5% in early trading, continuing the momentum from their robust quarterly earnings reports. Alphabet gained 4.07%, while Meta Platforms rose 3.48%, indicating broad-based strength among technology giants. Tesla advanced 2.13%, while Apple traded lower, declining approximately 0.65% as the iPhone maker continued to face pressure following its weaker-than-expected results. 

Nvidia was the sole underperformer among the group, declining 0.75% in early trading, as semiconductor weakness persisted despite the broader market rally. The divergence highlighted the ongoing rotation away from pure-play semiconductor names toward software and cloud computing companies with more stable earnings profiles. The Magnificent Seven’s collective performance underscored the enduring strength of large-cap technology companies. 

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The technology sector’s performance was reflected in the Nasdaq 100 heatmap, which showed green across most constituents except for semiconductor names. Microsoft’s gains were supported by its continued dominance in cloud computing and AI infrastructure, while Amazon benefited from strong cloud-computing results that had driven its 15% surge on Friday. The sector’s performance suggested that investors were rewarding companies with clear AI monetisation strategies while punishing those facing execution challenges. 

Palantir Gains 2.13% Ahead of Q2 Earnings as Software Rally Continues 

Palantir Technologies advanced 2.13% in early trading as investors positioned themselves ahead of the company’s second-quarter earnings report, scheduled for release after the closing bell. Analysts expect the data analytics firm to report earnings of 33 cents per share on revenue of $1.81 billion, reflecting continued strong demand for its AI-powered platforms. The stock has declined approximately 30% year-to-date, making the earnings report particularly significant for investor sentiment. 

The broader software sector demonstrated strength, with CrowdStrike rising 2.65% and Shopify advancing 2.56%, reflecting continued optimism about cybersecurity and e-commerce platforms. Adobe gained 3.52%, while Intuit climbed 3.14%, indicating sustained demand for productivity and enterprise software solutions. The performance of software stocks stood in stark contrast to semiconductor names, underscoring the sector rotation that has characterised recent market action. 

Earnings season has provided substantial support to equity markets, with Bank of America Securities noting that the earnings beat rate for the second quarter stands at 77%, representing the highest level since 2021. The S&P 500 is on track to deliver earnings growth of 27% year-over-year, excluding Alphabet and Amazon, or 45% including the two tech giants. The strong earnings performance has provided a fundamental underpinning for the market rally. 

Marriott International Slumps 5.27% After Revenue Misses Estimates 

Marriott International shares declined 5.27% after the hotel operator reported second-quarter revenue of $7.07 billion, below consensus estimates of $7.2 billion. The company’s adjusted earnings per share came in above expectations at $2.89, compared to analyst forecasts of $2.85, according to FactSet data. However, the revenue shortfall weighed on investor sentiment, particularly as the company’s guidance for the current quarter fell below expectations. 

The company attributed the revenue weakness to international softness, with revenue per available room declining 0.5% globally due to the conflict in the Middle East, where the metric suffered a 43% decline. Despite the quarterly challenges, Marriott raised its full-year guidance for revenue per available room growth and increased its earnings per share guidance to a range of $11.64 to $11.81, up from the previous forecast of $11.38 to $11.63. 

The hospitality sector’s mixed performance reflected the uneven recovery in global travel, with geopolitical tensions continuing to impact demand in certain regions. Marriott’s results stood in contrast to the broader market strength, highlighting the importance of company-specific factors in determining stock performance during the current earnings season. The company’s ability to raise its full-year guidance suggested underlying resilience despite near-term challenges. 

US Dollar Index Weakens to 99.75, Gold Holds Above $4,000 as Safe-Haven Demand Wanes 

The US dollar index declined 0.2% to 99.75 as safe-haven demand diminished following the US-Iran diplomatic breakthrough, with the greenback weakening against most major currencies. The dollar’s decline was most pronounced against the yen, which strengthened following coordinated US-Japan intervention efforts. The currency market movements reflected shifting risk sentiment as investors reduced their defensive positioning. 

Gold futures traded slightly lower at approximately $4,100 per ounce, declining 0.2% as the reduced geopolitical uncertainty diminished the precious metal’s safe-haven appeal. The modest decline in gold prices suggested that some risk-off positioning remained in place, reflecting ongoing caution about the durability of the diplomatic breakthrough. The metal’s ability to hold above the $4,000 level indicated continued underlying support from inflationary concerns. 

Bitcoin traded around $62,900, declining modestly over the past 24 hours, while the broader cryptocurrency market showed mixed performance. The digital asset’s movement reflected the complex interplay between risk sentiment and monetary policy expectations, with lower Treasury yields providing modest support for alternative assets. The currency and commodity market movements highlighted the comprehensive impact of the US-Iran diplomatic breakthrough. 

The August trading month commenced with significant optimism as easing US-Iran tensions triggered a sharp decline in oil prices and US Treasury yields, providing substantial support to equity valuations. The Dow Jones Industrial Average surged 609.72 points, while the S&P 500 and Nasdaq Composite advanced 0.65% and 0.75% respectively, as investors responded positively to the diplomatic breakthrough. However, semiconductor weakness and pharmaceutical sector volatility underscore the importance of maintaining disciplined risk management and sector allocation during this period of heightened uncertainty. The upcoming July non-farm payrolls report and continued corporate earnings releases will provide critical guidance for market direction.