U.S. stocks opened August with a broad relief rally Monday after President Donald Trump said he had called off a planned military strike on Iran in favor of negotiations, sending crude prices sharply lower and lifting the Dow Jones Industrial Average to a record close.
The Dow added roughly 560 points, a gain of about 1.3%, to finish at an all-time high, according to The Motley Fool and Yahoo Finance. The S&P 500 rose 1.5% to close near 7,600, while the tech-heavy Nasdaq Composite led the major averages with a gain of about 2%.
Crude Gives Back Its War Premium
The catalyst was energy. Brent crude for October delivery fell as much as 7.3% to $81.55 a barrel, and West Texas Intermediate for September settled down 5.86% at $79.71, as traders stripped out geopolitical risk premium that had been building for weeks.
Trump said allies in the Middle East, including Saudi Arabia, had asked him to pursue an agreement rather than launch what he described as a "massive attack." He said the proposed deal would include the "Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat," with talks set to begin Monday.
Tehran offered a more restrained account. Iranian Foreign Ministry spokesman Esmaeil Baghaei said Iran was holding talks only with Oman, and only regarding which routes ships may sail through the Strait of Hormuz — a gap between the two descriptions that leaves room for the risk premium to return. Crude was also pressured by another modest increase to production quotas from major OPEC+ nations.
Big Tech Extends Its Run
Technology shares built on last week's earnings momentum. Amazon rose roughly 4.7%, pushing its market capitalization to about $3.05 trillion, extending the rally that followed its second-quarter cloud results. The Nasdaq's outperformance suggests investors treated cheaper energy as a straightforward margin and consumer-spending tailwind rather than a signal of weakening demand.
The Macro Backdrop Is Softer Than the Tape
Monday's optimism sits against a slower growth picture. The Bureau of Economic Analysis reported on July 30 that real GDP grew at a 1.5% annual rate in the second quarter, down from 2.1% in the first and below the roughly 2.0% to 2.1% economists had expected. Consumer spending was strong at 3.2% and business investment rose 8.4%, but net trade subtracted about a full percentage point from growth. Headline PCE inflation reaccelerated to 5.1%, even as the core measure the Federal Reserve watches most closely cooled to 3.4%. A second estimate is due August 26.
What to Watch This Week
The week's data is centered on the labor market. The Job Openings and Labor Turnover Survey arrives Tuesday, and the July employment report lands Friday. Economists surveyed by Bloomberg expect payrolls to have risen by 85,000 after a disappointing 57,000 gain in June — a rebound, but still below the pace set earlier in 2026.
That combination — cooling growth, sticky headline inflation and a decelerating labor market — is what makes Friday's print consequential. Cheaper crude helps the inflation math, but a second straight weak payroll number would sharpen the debate over how long the Fed can hold its current stance.
Sources: Bloomberg, CNBC, TheStreet, Yahoo Finance, The Motley Fool, 24/7 Wall St., OilPrice.com, U.S. Bureau of Economic Analysis