US stock indexes closed higher on Monday, recouping early losses driven by Iran’s suspension of ceasefire talks with the United States. The S&P 500 rose 0.36%, the Dow Jones Industrial Average gained 0.14%, and the Nasdaq 100 advanced 0.66%. June E-mini S&P futures were up 0.32%, while June E-mini Nasdaq futures climbed 0.61%.
Early in the session, Iran’s Tasnim news agency reported that the country had halted messages with the US regarding a draft ceasefire agreement, citing escalated Israeli attacks on Lebanon. Tehran has maintained that a US-Iran truce requires a simultaneous cessation of hostilities in Lebanon. However, sentiment improved later after President Trump said he spoke with both Hezbollah officials and Israeli Prime Minister Netanyahu, who affirmed their willingness to halt mutual attacks. Trump also stated that negotiations with Iran were progressing rapidly. Crude oil prices ended the day up more than 5%.
Technology shares were supported by Nvidia, which jumped over 6% after announcing plans to launch a new PC chip aimed at challenging Intel and AMD. Intel fell 4.9%, AMD slipped 1.3%, and Qualcomm dropped 8.8%. Microsoft rose 2.3% following Nvidia CEO comments that alleviated concerns over potential AI-driven disruptions to the software sector.
Markets also reacted positively to economic data. The May US manufacturing PMI rose 1.3 points to 54.0, exceeding expectations for a 0.3-point increase to 53.0. However, S&P’s final-May manufacturing PMI was revised 0.2 points lower to 55.1 compared to the preliminary 55.3 reading. On the inflation front, the ISM prices-paid index fell 2.5 points to 82.1, well below forecasts for a 0.4-point rise to 85.0.
Investors are now looking to Friday’s unemployment report, which is expected to show an unchanged rate of 4.3% and a gain of 89,000 nonfarm payrolls. The market is pricing in a 5% chance of a 25-basis-point Fed rate hike at the June 16-17 meeting.
The tail end of earnings season showed another strong quarter: 84% of the 485 S&P 500 firms that have reported so far beat estimates, with overall Q1 profits projected to rise 12% year-over-year. Excluding tech, earnings are expected to grow just 3%, the slowest pace in two years.
Global markets were mixed. The Euro Stoxx 50 dipped 0.26%, while Japan’s Nikkei Average hit a record high, climbing 0.91%. China’s Shanghai Composite slipped 0.27%.
Bond markets reflected rising risk appetite. June 10-year T-notes fell 3.5 ticks, pushing the yield to 4.459%. The 10-year breakeven inflation rate rose 1.1 basis points to 2.411%. In Europe, the 10-year German Bund yield gained 6.5 basis points to 3.003%, and the UK gilt yield advanced 8.5 basis points to 4.897%. Rate swaps imply a nearly 100% chance of a 25 bp ECB hike on June 11.
Among individual stocks, Taylor Morrison Home surged 22% on news of its $8.5 billion acquisition by Berkshire Hathaway. MGM Resorts rallied 17% after DealBook reported People Inc, led by Barry Diller, offered to buy the remaining shares at an $18 billion valuation. Meanwhile, Strategy fell 5.8% after disclosing the sale of 32 bitcoins for about $2.5 million.
Earnings reports scheduled for Tuesday include Dollar General, Donaldson Co, Palo Alto Networks, GitLab, and Ulta Beauty.