Dow Jones: Industrial Average Hits Record as Fed Outlook Improves

Iran Deal Sends Dow to Record High as Crude Collapses

The Dow Jones Industrial Average jumped 630 points Monday to a fresh record. The S&P 500 gained 1.6%. The Nasdaq Composite climbed 2.4%. A preliminary U.S.-Iran peace deal dropped Sunday night, July WTI crude oil collapsed roughly 5% to around $80 a barrel, and that was all the market needed to take off running on the first day of a holiday-shortened week.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow Jones Industrial Average resumed its uptrend on the main swing chart after taking out 51657.89 on Monday. The new swing bottom is 49909.07. Additional support is being provided by the 50-day moving average at 49665.81.

Daily S&P 500 Index (SPX) Technical Analysis

The S&P 500 Index gapped a key retracement zone at 7474.57 to 7429.38, shifting momentum to the upside and turning the area into support.

The main uptrend will resume when buyers take out the last main top at 7620.90. The nearest support is the 50-day moving average at 7267.34, followed by the main swing bottom at 7237.85.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite Index jumped the retracement zone at 26346.05 to 26085.30, turning it into support, while shifting momentum to the upside. The rally is likely to continue over the near-term with the next upside objective the all-time high at 27190.21.

Besides the retracement zone support, the downside is also projected by the 50-day moving average at 25304.80 and the main swing bottom at 24980.38.

The price action in all of the major indexes is being driven by momentum.

Crude Collapse Repriced the Whole Market

President Trump announced late Sunday that the U.S. and Iran reached a framework agreement to end the conflict. Pakistan’s Prime Minister Sharif said a memorandum of understanding is expected to be signed in Switzerland later this week. Trump authorized the reopening of the Strait of Hormuz and Vice President Vance indicated it stays open long-term.

I’ve watched this chain before. July WTI crude oil falls hard, inflation expectations come down with it, and rate hike bets start coming off. CME FedWatch now shows December rate hike odds at roughly 53%, down from 69% a week ago. Better than 98% probability the Fed holds at 3.50% to 3.75% through this week’s meeting. The 10-Year U.S. Treasury yield and the 2-Year U.S. Treasury yield both moved lower on the session. That’s the setup that sent money straight back into growth stocks and the Nasdaq Composite led for a reason.

Winners and Losers Tell the Story

SpaceX kept running on its second day of public trading, up more than 7% after surging 19% on its Nasdaq debut Friday. The buying looks orderly, not speculative. That is a different signal than most recent listings.

Airlines and cruise stocks took off on the crude collapse. United Airlines gained more than 5%. Delta Air Lines advanced 4%. Norwegian Cruise Line and Carnival Corporation each rose around 4.5%. Royal Caribbean added roughly 4%. Lower fuel costs hit margins directly for those names and the market priced it in immediately.

Energy stocks took the hit on the other side. APA Corporation and Devon Energy both fell more than 3.5%. Marathon Petroleum and EOG Resources dropped approximately 3%. Chevron and Exxon Mobil each declined more than 2.5%. Lower crude cuts cash flow for producers and the rotation out was fast.

Micron Technology surged more than 7.5% after TD Cowen raised its price target on growing memory demand from the AI infrastructure buildout. Firefly Aerospace gained 5% and Rocket Lab rose nearly 4% after KeyBanc upgraded both to overweight.

Paramount Skydance climbed nearly 5% after the U.S. Justice Department approved Paramount’s proposed acquisition of Warner Bros. Discovery. Federal approval is done but state-level scrutiny could still come.

Fox Corporation fell 12% after announcing a cash-and-stock deal to acquire Roku at $160 per share, an 11% premium to Roku’s previous close. Roku gained 2%.

Freeport-McMoRan advanced 4% as Spot Gold (XAUUSD) climbed more than 2.5%. The Iran peace framework did exactly what the gold-rate chain says it should. Lower crude, lower inflation pressure, rate hike expectations coming off, and Spot Gold (XAUUSD) runs. That is the rate trade working, not the safe-haven trade.

What to Watch

Holiday-shortened week with the Fed meeting Wednesday. The market is not expecting a move on rates but Fed Chair Kevin Warsh’s tone on inflation after a 5% crude drop is what matters. Friday’s signing in Switzerland is what this whole trade hangs on. Without that deal closing, Monday’s gap has nothing underneath it. Warsh sounding even slightly less hawkish Wednesday would stack a second catalyst on top of the first.

But I’ve watched these gaps open strong on geopolitical headlines and give it all back by Friday when the details fall through. June WTI crude oil is only sitting at $80 because traders believe the Strait of Hormuz stays open. That changes and Monday’s winners become Tuesday’s losers.

More Information in our Economic Calendar.