US stocks rose on Monday as investors continued to assess the latest developments in the ongoing negotiations regarding the war between the United States and Iran, while markets awaited closely watched inflation data from the Federal Reserve.
The S&P 500 rose 0.2%, while the Nasdaq Composite moved near its previous closing levels with little change. The Dow Jones Industrial Average added about 200 points, or 0.4%.
Micron Technology shares emerged as one of the biggest gainers of the session, rising nearly 5% ahead of its quarterly earnings announcement scheduled for Wednesday after the market closes. Conversely, SpaceX shares fell by more than 5%, heading for their third consecutive session of daily losses.
Oil prices fell after progress in negotiations.
Oil prices came under downward pressure after mediators from Qatar and Pakistan announced that US and Iranian officials had reached a roadmap aimed at concluding a final agreement within 60 days.
In this context, Brent crude futures reversed course after gains made at the start of Asian trading, falling 1.6% to $79.30 a barrel.
US West Texas Intermediate crude also pared its early gains, after rising by about 3% at the start of the session, later falling by about 0.8% to $76 a barrel.
Investors view any progress in the negotiations as a factor that would reduce concerns about global energy supplies, which directly impacts oil prices and inflation expectations.
Strong market recovery following monetary policy turmoil
Major U.S. indexes recovered on Thursday following a sell-off on Wednesday, as uncertainty over the direction of U.S. monetary policy worried investors.
The strong rise in shares of electronic chip companies helped lead the recovery wave, enabling the main indices to end the week with collective gains.
The S&P 500 rose nearly 1% during the week, marking its eleventh consecutive week of gains. The Dow Jones Industrial Average also climbed nearly 1%, while the Nasdaq Composite gained more than 2%.
US markets were closed on Friday for the Juneteenth holiday, making Monday's session of particular interest to investors to assess new market trends.
Inflation in the spotlight
Investors are awaiting the release this week of the Personal Consumption Expenditures (PCE) index for May, due on Thursday, which is the Federal Reserve's preferred gauge for monitoring inflation developments.
Economists predict that the core index, which excludes food and energy prices, is likely to rise compared to its levels in April.
This data is becoming increasingly important following the Federal Reserve’s recent meeting, which adopted a more hawkish tone on inflation, prompting markets to bring forward their expectations for the next interest rate hike to October rather than previous estimates.
Investors are now closely monitoring any new inflation readings, looking for indicators that may confirm or deny the likelihood of the US Federal Reserve tightening monetary policy in the coming months.
Despite the numerous risks that markets may face in the coming period, some experts still believe that the current environment remains positive for US stocks.
Tom Lee, head of research at Fundstrat Global Advisors, pointed to a range of factors that could affect markets in the future, including the formation of new working groups within the Federal Reserve, as well as the potential repercussions on global supply chains resulting from disruptions related to the Strait of Hormuz.
He added that general conditions still favor stocks, stressing that the market continues to benefit from a combination of economic growth and relatively stable financial conditions, despite the ongoing uncertainty related to inflation and monetary policy.
