Wall Street started the first trading day of August with a strong advance as investors repriced oil risk after U.S. President Donald Trump signaled progress in talks with Iran. That shift fed expectations that shipping through the Strait of Hormuz could resume, sending crude sharply lower and lifting both U.S. equities and Treasuries.
All three major U.S. indexes closed higher. The Dow Jones Industrial Average added 1.32% to a record close, the Nasdaq Composite rose 2.13%, and the S&P 500 gained 1.48%, moving back toward its historical highs.
Conflicting U.S.-Iran signals hit crude prices
Trump said Monday that talks between the U.S. and Iran had begun, outlining a first phase centered on reopening the Strait of Hormuz and a second phase focused on denuclearization. He also suggested the waterway could “possibly reopen by tomorrow at the latest.”
Iranian officials quickly rejected the claim of direct talks with Washington. They said Iran was only discussing secure shipping arrangements for the Strait of Hormuz with Oman and warned that it would not allow the U.S. to open routes outside Iranian control. Even with both sides presenting different versions, the market traded on the possibility of de-escalation. WTI crude plunged 7.42% and Brent fell about 6%.
Trump also turned his attention to U.S. oil majors, naming Exxon Mobil and Chevron and demanding that they lower prices for consumers “now.” Data cited in the report showed Exxon Mobil and Chevron posted a combined $29 billion in second-quarter profit, or roughly $318 million a day, with year-on-year growth of more than threefold. Trump said he was deeply dissatisfied and argued the companies were exploiting supply shortages for outsized profit.
Energy was the only decliner among the S&P 500’s 11 sectors as investors trimmed the risk premium built up during the Middle East conflict.
Gold holds $4,000 while Treasury yields move lower
Gold stayed above the key $4,000 level and finished modestly higher. The Bank of Korea plans to buy domestically refined gold bars for the first time in 13 years and also bought a small amount of gold ETFs in the second quarter. According to the bank, rising geopolitical risk has increased the need to diversify foreign exchange reserves. Its gold holdings stood at 104.4 tons as of July, while foreign exchange reserves totaled $427.36 billion at the end of June.
In rates, falling oil prices helped ease inflation pressure. The 10-year U.S. Treasury yield fell about 5 basis points to around 4.68%, while the 2-year yield ended near 4.246%, with the long end outperforming the short end. ING rates strategist Michiel Tukker said oil remains the biggest uncertainty and will largely determine whether yields move up or down this week. B. Riley Wealth chief market strategist Art Hogan described a simple screen for the trading desk: look first at international oil prices and the 10-year Treasury yield, and if both are falling, markets usually stay calm.
The U.S. Dollar Index dipped below 100 during the session and later stabilized. The dollar did not weaken significantly in part because strong U.S. manufacturing data reduced bets on faster easing. The July ISM manufacturing index climbed to 55.6, the highest level since May 2022, but market pricing for a September Federal Reserve rate hike still stood at 66.5%.
The yen was another focal point. Estimates showed the Bank of Japan used about $87 billion, or roughly JPY 11 trillion, in intervention on July 30 and 31. Investors worried that funding such intervention through Treasury sales could push U.S. yields higher. U.S. Treasury Secretary Bessent said the Federal Reserve’s liquidity facilities allow countries to borrow dollars against Treasuries as collateral without having to sell the bonds outright, helping ease short-term pressure in the Treasury market.
AI and cloud trade returns as the Magnificent Seven rebound
The strongest move in equities came from AI and cloud stocks. The Magnificent Seven index jumped 3.6%, its best one-day performance since March 31. Amazon rose more than 4% and crossed a $3 trillion market capitalization for the first time. Nvidia gained nearly 3% and moved back above $5 trillion. Meta climbed more than 6%, while Microsoft and Google each rose close to 5%.
Money flows suggested a turn from defense back to offense. Cloud providers CoreWeave and Oracle advanced alongside AI software names such as Palantir and Snowflake. Morgan Stanley said in a new report that the recent pullback in AI stocks was mainly technical in nature and that strong ROI from enterprise AI usage together with sustained demand for computing power continues to support the long-term AI infrastructure cycle. Optical networking, quantum computing and space-related stocks also traded actively.
Amazon tops $3 trillion on AWS strength
Amazon closed up 4.58% after stronger-than-expected second-quarter AWS performance pushed its market value above $3 trillion for the first time. Wall Street was described as highly optimistic about higher 2026 capital spending, arguing that the imbalance between AI compute supply and demand is still in place. Chairman Jeff Bezos also unveiled a $4.1 billion stock-sale plan. Related cloud names surged, with CoreWeave up 19%, NEBIUS rising more than 11%, and Oracle gaining over 9%.
Meta keeps the market focused on AI buildout
Meta rose more than 6% to lead the group. Heavy spending on AI infrastructure may weigh on profits in the short run, but investors appear more focused on long-term positioning. Mark Zuckerberg reiterated that Meta’s 2026 capital expenditure ceiling could reach as high as $145 billion, signaling that the company plans to keep spending aggressively on AI infrastructure.
Google passes Apple in market value
Google gained close to 5%, moving ahead of Apple to become the world’s second-largest company by market capitalization. The report said its off-balance-sheet guarantees had jumped sixfold in nine months to $43.8 billion, using financial backing to secure TPU orders and accelerate data center expansion.
Microsoft and Nvidia extend the AI infrastructure bid
Microsoft climbed 4.93% and is now up about 25% over the last three trading sessions. Institutions continued to raise price targets after earnings. UBS lifted its target from $480 to $525, while CMB International raised its target from $616 to $634. Both maintained buy ratings, and the average consensus target cited in the report was around $565.
Nvidia rose nearly 3% as the AI infrastructure trade revived, taking its market value back above $5 trillion. Goldman Sachs chief strategist Ben Snider said investors do not need to overreact to recent volatility in AI and momentum assets. He described the latest pullback as more of a concentration squeeze and consolidation, with strong corporate earnings still serving as the central driver of the U.S. equity bull market. Goldman highlighted Alphabet, Amazon, Microsoft, Nvidia and Broadcom as major earnings contributors.
Space, AI software, optical networking and quantum names all rally
SpaceX jumps ahead of its first quarterly report as a public company
SpaceX gained 5.68% late in the session ahead of its first quarterly earnings release since listing, scheduled for after the close on Aug. 4. Since its mid-June listing, the stock had spent multiple weeks below its $135 offer price and had fallen more than 50% from its intraday peak, wiping out more than $500 billion in market value. Elon Musk replied to a user on X that he agreed the current period would likely be seen in hindsight as an “excellent buying opportunity.” That comment appeared to energize retail sentiment before earnings.
Other space names also rose. Rocket Lab and Boeing both gained more than 8%, with Boeing helped by FAA airworthiness certification for the 737 Max 7. AST SpaceMobile rose nearly 8%, and Viasat added close to 6%.
Palantir and Snap rise in late trading
Palantir rose more than 14% in after-hours trading after reporting second-quarter results and full-year guidance above expectations. The company lifted full-year revenue guidance to $8.15 billion-$8.16 billion, well above its prior outlook. U.S. commercial revenue jumped 149% year on year, reinforcing the market’s AI deployment narrative. Other AI software names moved up as well, with Reddit up nearly 10%, Snowflake up nearly 5%, and ServiceNow, Applovin and Datadog all rising more than 2%.
Snap climbed more than 7% in after-hours trading. Second-quarter revenue beat expectations, helped by World Cup advertising demand, but the CEO said AR glasses remain the company’s biggest long-term opportunity, a message that received a favorable market response.
Optical networking, quantum computing and storage names stay active
Demand tied to AI data centers supported optical networking stocks. Applied Optoelectronics rose nearly 17%, AXT Inc climbed nearly 14%, Lumentum and Coherent gained more than 9%, Corning rose over 6%, and Credo added more than 5%.
Quantum computing stocks also advanced broadly. D-Wave Quantum gained more than 10%, Rigetti Computing rose over 7%, IonQ added nearly 7%, and IBM and Honeywell were each up more than 1%.
In storage, Micron fell nearly 6% intraday before rebounding to finish higher. SanDisk gained 6.03% on expectations for NAND recovery and stronger data center demand. Seagate fell 2.93%, though BNP Paribas raised its target price sharply from $1,050 to $1,275 and kept an outperform rating, citing rising nearline HDD demand from AI applications and larger committed volumes under long-term agreements for 2028-2029 that could help stabilize future revenue and pricing.
Most crypto-linked stocks advance
Stocks tied to crypto mostly moved higher. SoFi Technologies rose more than 10%, IREN climbed over 8%, Hut 8 and Robinhood each gained more than 4%, and Strategy added nearly 2%. Morgan Stanley said valuations for names including TeraWulf, Cipher Mining, HUT 8, Riot Platforms, Applied Digital and Galaxy Digital are now low and could leave room for re-rating.
Elsewhere, GameStop fell more than 12% after the company said it would conduct a private exchange offer involving $1.4 billion in convertible notes. Circle dropped nearly 4%.
What markets are watching next
Aug. 4, Tuesday
- Ai4 2026 and the FMS flash memory summit run from Aug. 4 to Aug. 6. Nvidia, Google, Microsoft, Meta and Samsung are among the companies attending. Hinton, Fei-Fei Li and Andrew Ng are set to appear together, and Samsung is expected to present its HBM4E roadmap.
- Earnings due include Hut 8, Cipher Mining, Caterpillar, Pfizer, Merck, Spotify, HSBC and Techtronic Industries.
Aug. 5, Wednesday
- At 04:30, SpaceX is scheduled to report its first earnings as a public company. Markets will focus on Starlink revenue, Starship commercialization, free cash flow and the pace of capital spending. Because a large lockup expiration is due two days later, a weak growth narrative could leave the stock facing pressure from both liquidity and valuation. Strong Starlink revenue and commercial launch guidance could help soften selling pressure before the lockup ends.
- At 05:00, AMD, Astera Labs and Arista Networks are due to report. AMD’s earnings are seen as a key test for the second tier of AI chip companies, with attention on MI-series shipments, data center revenue, margins and second-half guidance. Astera Labs is a key name in AI server interconnect and data center connectivity chips, while Arista is closely watched as a read-through for AI network switches and cloud data center spending.
- The White House is planning an AI industry meeting to review the regulatory framework, with OpenAI, Google, Anthropic and Meta expected to join. If the framework leans toward voluntary safety testing and moderate oversight, the valuation discount on major AI companies could narrow. If reviews become stricter, smaller model developers and application-layer firms could face higher compliance costs.