US equity benchmarks jumped on Monday as traders waited for earnings results of megacap technology companies later this week.
A cooling of geopolitical tensions in the Middle East and a sharp sell-off in the oil markets also boosted sentiments on Monday.
At the time of writing, the Dow Jones Industrial Average was up 0.8%, while the S&P 5oo index rose 0.5%.
The Nasdaq Composite index also gained 0.6% earlier in the session.
Wall Street was coming off steep losses from last week.
However, Monday’s gains saw the benchmarks recouping some of the losses.
The main focus was on events in the week ahead, most notably corporate results, with around 169 S&P 500 companies scheduled to report through the week, according to a Reuters’ report.
Israel’s limited strike on Iran
Israel’s pre-dawn strike on Saturday targeted military facilities in Iran, avoiding nuclear and oil sites.
This eased fears of a greater conflict between the two countries.
The market had been anticipating that Israel may target oil and nuclear facilities in Iran, crippling supply from the country.
However, the limited strike on Saturday was seen by the market as easing of tensions.
Moreover, Iran downplayed the impact of the Israeli strikes, which further calmed down tensions in the region.
Oil prices plunged 6% on Monday as traders saw the geopolitical risk premiums fade after the limited Israel strike.
As there is no immediate supply risk from Iran and the Middle East oil prices have given back all of their gains built up since the October 1 missile strike by Iran on Tel Aviv.
At the time of writing, the West Texas Intermediate was down 5.3% at $67.91 per barrel, while Brent was at $71.65 per barrel, also down 5.3% from the previous close.
Earnings in focus
This week will also see several earnings results from top technology companies in the US.
Five of the magnificent seven companies, namely Alphabet, Microsoft, Meta Platforms, Amazon and Apple, are scheduled to report their latest financial results.
Shares of Apple rose 0.6% on Monday, while those of Alphabet climbed more than 1%.
Horizon Investments head of research and quantitative strategies Mike Dickson told CNBC:
Given high valuations overall, there’s going to be a laser focus on if they’re able to continue to hit those growth numbers.
Aaon shares jump more than 8%
Shares of Aaon jumped more than 8% on Monday as the company announced on Friday that it had received a $175 million order.
The company said it received an order from one data center customer to supply liquid cooling equipment worth $175 million.
Data center development has been fueled by artificial intelligence.
Companies that can keep chips cool as they train AI models are likely to benefit.
Aaon shares have climbed nearly 60% since the beginning of the year.
If the stock hits $130, it will have risen 17% from Friday’s close.
Meanwhile, shares of Spotify Technology SA rose nearly 2% on Monday after Wells Fargo named the stock a top pick.
The bank has an overweight rating on the audio streaming giant and has also increased its target price.
Analyst Steven Cahall was quoted by CNBC in a report:
Incremental Premium gross margins imply that Spotify’s evolving product mix and Label relationships are improving the bottom-line.
McDonald’s shares bounce back
Shares of McDonald’s bounced back on Monday after the company announced that its Quarter Pounder hamburgers would return to restaurants this week.
The Quarter Pounder burgers were removed from the restaurant’s menu last week after a deadly E. coli outbreak.
The fast food chain said on Sunday that tests revealed the beef patties had no link to the E. coli outbreak.
However, restaurants will serve the burger without slivered onions, which is now anticipated to be the source of the outbreak.
McDonald’s shares crashed nearly 8% last week, its worst weekly performance since 2020. Shares were about 1.5% higher on Monday.
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