Dow Jones and Nasdaq Index: Amazon and Lower Oil Boost Stocks but ISM Favors Hawks

Oil Break Gives Stocks a Broad Lift Monday

Wall Street is rallying Monday on two things: crude oil broke hard enough to pull Treasury yields lower, and Amazon crossed $3 trillion in market cap for the first time after gaining 17% last week on strong cloud earnings. Brent fell more than 5.5% after President Trump said talks with Iran over reopening the Strait of Hormuz would take place Monday. The two-year yield eased 3.9 basis points and the bid spread across seven of the 11 S&P 500 sectors. Communication services is leading. Energy is lagging as crude weakens.

Iran says there are no immediate plans for direct talks with Washington. That leaves crude vulnerable to a sharp rebound if the diplomatic story falls apart by midweek. Oil comes back, yields turn higher and Monday’s bid gets tested.

At 15:47 GMT, the Dow is up 570.47 points or 1.09%, the S&P 500 is higher by 1.25% and the Nasdaq Composite is up 1.89%.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow Jones Industrial Average gapped higher on the cash market chart on Monday, creating enough upside momentum to take out the last two swing tops at 52901.87 and 52924.86, setting up a potential surge into the record high at 53289.30.

The nearest support is a short-term retracement zone at 52621.85 to 52415.68. The major support and trend indicator is the 52-week moving average at 51762.76.

Daily S&P 500 Index (SPX) Technical Analysis

The benchmark S&P 500 Index (SPX) is surging on Monday with traders eyeing the record high at 7620.90 after taking out a pair of swing tops at 7525.94 and 7581.50. The rally was set up on Friday with the strong close on the bullish side of the 50-day moving average at 7473.49 and the short-term retracement zone at 7474.57 to 7429.38. This area is now a solid support cluster.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The tech-heavy Nasdaq Composite Index (IXIC) is soaring as we approach the mid-session on Monday. The index sliced through potential retracement level resistance at 25594.27 and 25807.78, setting up a potential test of the 50-day moving average at 25939.94. Overtaking this indicator with conviction will change the trend to up for those who follow moving averages. The swing chart will change to up if buyers can take out 26316.81.

Strong ISM Keeps a September Rate Hike in Play

The July ISM manufacturing report came in at 55.6, well above the 54.0 estimate and the best reading since May 2022. Production hit 58.5. Employment moved to 52.8, the first expansion reading in 33 months. That is not what anybody hoping for a Fed pause wanted to see four days before payrolls.

The prices index eased slightly to 71.1 but it is still deep inside expansion territory. Factory activity is picking up, manufacturers are hiring again and input costs are not coming down fast enough. The three officials who voted for an immediate hike last week now have a manufacturing number backing them up. New York Fed President John Williams said inflation pressures should ease gradually, but the bond market is going to want proof of that on Friday.

I think this report tilts the week toward sellers. The oil headline is giving stocks a bid today but the ISM number is telling you the economy is running hot enough for the Fed to act. If Friday’s payrolls confirm what the manufacturing data is showing, September comes back fast.

Cloud Earnings Hold but Chips Break Lower

Amazon is up nearly 5% on Monday and Microsoft is higher as the market continues rewarding the companies that proved cloud spending is producing revenue, not just burning capital. The chip group is not following. The Philadelphia Semiconductor Index is down 2.8% with Micron off 3.4% after reports that Chinese rival CXMT is considering another memory-chip plant in Beijing. Cloud names are getting bought on earnings. Memory stocks are still dealing with overcapacity risk and July’s damage.

Software is holding up better with Salesforce higher. Palantir reports after Monday’s close and that is the first test of whether AI demand is reaching the software side in a way that shows up in earnings.

What to Watch

The oil drop opened the door Monday but the ISM report complicated the story. Falling crude takes inflation pressure off the Fed but manufacturing at its strongest level since 2022 with employment expanding for the first time in nearly three years gives the hawks exactly the kind of data they were looking for. Friday’s payrolls settles it. Strong hiring with firm wages on top of this manufacturing number makes the September case hard to argue against. A weak report with softer wages is the only way the rally gets another leg because it would contradict what the ISM is showing and give the committee a reason to wait.

The Dow and S&P 500 are pressing toward their record highs. The Nasdaq Composite is testing resistance near its 50-day moving average and needs to clear it with conviction to change the trend. Buyers have oil and cloud earnings working for them. Sellers have the ISM, the Fed split and a payrolls report that can rebuild the rate trade in one morning. The bulls need the jobs data to disappoint or this week’s bid runs into the same problem every rally has hit since July.

More Information in our Economic Calendar.