The S&P 500 Index ($SPX) (SPY) closed up +1.49% on Monday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up +0.71%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +2.83%. December E-mini S&P futures (ESZ26) rose +1.50%, and December E-mini Nasdaq futures (NQZ26) rose +2.84%.
Stock indexes rallied sharply on Monday, with the S&P 500 posting a five-week high and the Nasdaq 100 reaching a three-month high. The rally was fueled by a sharp decline in crude oil prices, which pushed bond yields lower and bolstered market sentiment. WTI crude fell more than 4% to a 1.5-week low, while the 10-year Treasury yield dropped 3 basis points to 4.96%. Positive anticipation ahead of this week’s summit between Presidents Trump and Xi Jinping also provided a tailwind for equities. Support additionally came from a robust rally in chipmakers and AI-infrastructure stocks, as well as cryptocurrency-exposed equities, with Bitcoin surging to a 7.5-month high.
Stocks drew further encouragement from optimism surrounding US-China relations, after officials from both countries offered upbeat assessments of discussions on artificial intelligence, trade, and investment. US Trade Representative Jamieson Greer stated, “The focus is on stability between the US and China,” and confirmed work is underway on a trade truce extension.
US economic data showed the August Chicago Fed National Activity Index fell -0.12 to -0.04, in line with expectations.
Hawkish Federal Reserve commentary weighed on stocks and bonds. Chicago Fed President Austan Goolsbee said restoring price stability may require further rate hikes to narrow the supply-demand gap, which could result in lower employment, wages, and growth. St. Louis Fed President Alberto Musalem likewise noted that core inflation may be running roughly 1 percentage point above the Fed’s 2% target, suggesting additional tightening is likely.
Bitcoin (^BTCUSD) surged more than 7% on Monday to a 7.5-month high, building on last Friday’s 5% rally, following the SEC’s move to advance a plan permitting digital versions of securities to trade in the US.
October WTI crude oil prices (CLV26) sank more than 4% to a 1.5-week low, driven by diplomatic efforts to end the US-Iran conflict and indications that crude flows through the Strait of Hormuz remain resilient. President Trump said he would “probably” be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the UN General Assembly. Admiral Brad Cooper, head of US Central Command, said crude and LNG flows over the past two weeks through the Strait of Hormuz were running at a six-month high.
Markets are pricing in a 55% probability of a 25 basis point Fed rate hike at the next FOMC meeting on October 27-28.
Overseas markets settled higher on Monday. The Euro Stoxx 50 closed up +1.31%. China’s Shanghai Composite climbed to a 1.5-week high, finishing up +0.97%. Japan’s Nikkei-225 did not trade, as markets were closed for the Respect-for-the-Aged Day holiday.
Interest Rates
December 10-year Treasury notes (ZNZ6) closed up +7 ticks on Monday. The 10-year Treasury yield fell -3.7 basis points to 4.959%. Notes rose after WTI crude oil dropped more than 4% to a 1.5-week low, easing inflation expectations. However, Treasuries gave back some gains following hawkish remarks from Chicago Fed President Austan Goolsbee and St. Louis Fed President Alberto Musalem, who indicated the Fed may need to raise rates further to restore price stability. Supply pressure also weighed on Treasuries, as the Treasury plans to auction $211 billion in notes and floating-rate notes this week, starting with Tuesday’s $69 billion auction of two-year notes.
European government bond yields moved lower on Monday. The 10-year German bund yield fell to a one-week low of 3.442% and finished down -6.1 basis points at 3.458%. The 10-year UK gilt yield dropped to a one-week low of 5.200% and closed down -8.3 basis points at 5.212%.
In its monthly report released Monday, the German Bundesbank said Q3 GDP would expand only “modestly” due to short-term factors such as low Rhine River water levels, but the economy is expected to grow at a “stronger” pace in Q4 and will “remain on its current path to recovery.” The Bundesbank added that “persistently high prices, not only for crude oil but also for natural gas and electricity, could amplify both direct and indirect effects and delay the return of inflation to 2%.”
Markets are discounting a 46% chance of a 25 basis point ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI stocks rallied on Monday, underpinning gains across the broader market. The iShares Semiconductor ETF (SOXX) closed up more than +4% at a five-week high. ARM Holdings (ARM) closed up over +16% to lead Nasdaq 100 gainers, and Intel (INTC) closed up more than +12% to lead S&P 500 gainers. Advanced Micro Devices (AMD) and Qualcomm (QCOM) each closed up more than +9%, and Marvell Technology (MRVL) rose more than +6%. Applied Materials (AMAT) and Lam Research (LRCX) each closed up more than +5%, and KLA Corp (KLAC) gained more than +4%.
The Magnificent Seven moved higher on Monday, providing support to the overall market. Meta Platforms (META) closed up over +11% after its new Muse AI app topped mobile app charts. Tesla (TSLA) closed up +3%, and Nvidia (NVDA) gained more than +2%. Alphabet (GOOGL), Amazon (AMZN), and Microsoft (MSFT) each closed up more than +1%, while Apple (AAPL) added +0.85%.
Cryptocurrency-exposed stocks surged on Monday after Bitcoin (^BTCUSD) rallied more than 7% to a 7.5-month high on positive momentum from the SEC’s advance of a plan allowing digital securities to trade in the US. Strategy (MSTR) closed up more than +9%, and BitMine Immersion Technologies (BMNR) rose more than +7%. Bullish (BLSH) and Galaxy Digital Holdings (GLXY) each closed up more than +5%, and Coinbase Global (COIN) gained more than +3%. Circle Internet Group (CRCL) and Robinhood Markets (HOOD) each closed up more than +2%, while Riot Platforms (RIOT) and Iren Ltd (IREN) each rose more than +1%.
Cybersecurity stocks moved higher on Monday, supporting broad market gains. Cloudflare (NET) closed up more than +8%, and SentinelOne (S) rose more than +5%. Zscaler (ZS), Crowdstrike Holdings (CRWD), and Okta (OKTA) each closed up more than +4%. Fortinet (FTNT) gained more than +3%, and Palo Alto Networks (PANW) rose more than +2%.
Airlines and cruise line operators rallied on Monday following the more than 4% plunge in WTI crude oil to a 1.5-week low, which reduces fuel costs and improves profitability outlooks. United Airlines Holdings (UAL) closed up more than +5%, and American Airlines Group (AAL) rose more than +4%. Delta Air Lines (DAL) and Alaska Air Group (ALK) each gained more than +3%, and Carnival (CCL) rose more than +2%. Southwest Airlines (LUV), Royal Caribbean (RCL), and Norwegian Cruise Line Holdings (NCLH) each closed up more than +1%.
Energy stocks and service providers retreated on Monday after WTI crude oil plunged more than 4% to a 1.5-week low. Marathon Petroleum (MPC) closed down more than -5% to lead S&P 500 losers, and Phillips 66 (PSX) and Valero Energy (VLO) each fell more than -4%. ConocoPhillips (COP) and ExxonMobil (XOM) each declined more than -3%, while Diamondback Energy (FANG), Occidental Petroleum (OXY), APA Corp (APA), and Devon Energy (DVN) each fell more than -2%. Chevron (CVX) closed down more than -2% to lead Dow Jones Industrials losers.
Warner Bros. Discovery (WBD) closed up more than +10% after Paramount Skydance settled lawsuits brought by 12 state attorneys general and the Writers Guild, clearing the way for Paramount to acquire Warner Bros. Discovery.
Ciena (CIEN) closed up more than +5% after Evercore ISI upgraded the stock to outperform from in line with a price target of $550.
Candel Therapeutics (CADL) closed up more than +3% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $18.
HP Inc. (HPQ) closed down more than -4% after projecting that industry-wide PC unit volumes will decline mid-single-digits in 2027.
Earnings Reports (9/22/2026)
AutoZone Inc (AZO), KB Home (KBH), MillerKnoll Inc (MLKN), Thor Industries Inc (THO), Worthington Enterprises Inc (WOR).
