Oil price drop helps US stocks bounce back after rough week

US stock markets rose on Monday, clawing back ground lost during a volatile trading week. The S&P 500 index climbed 0.8%, ending a three-week losing streak and moving within 2.3% of its all-time high. The Dow Jones Industrial Average added 547 points, or 1.1%, as of 10:15 a.m. Eastern time. The Nasdaq composite index also gained 1%.

A sharp decline in oil prices provided immediate relief to investors. Brent crude, the international benchmark, dropped 6.7% to $105.87 per barrel. This move reversed a recent spike caused by uncertainty surrounding the conflict with Iran and the global energy supply chain. Analysts noted that the price has swung between $70 and $120 since the war began, often reversing direction quickly.

Diplomatic progress from Tehran contributed to the easing of energy costs. Iran announced a two-day plan to reopen the Strait of Hormuz, a critical route for global energy shipments. The country also indicated it would resume nuclear talks with the United States. Over the weekend, Iran's top diplomat expressed hope for rationality in US diplomacy to prevent a return to all-out war.

Technology stocks, which led last week's selloff, showed signs of stabilization. Alphabet, the parent company of Google, rose 2.4% on Monday. This rebound followed a drop of more than 12% on Thursday, which marked its worst single-day decline in company history. Investors have grown concerned that heavy spending on artificial intelligence data centers may not yield enough profit to justify the costs. Alphabet's recent earnings showed slower growth in its search business and higher cash burn, fueling fears that AI could erode its primary revenue stream.

Nvidia, another key player in the AI sector, gained 1.9%. The chipmaker had fallen 4.2% on Friday, ceding the title of Wall Street's most valuable stock to Apple. Outside the tech sector, several companies outperformed expectations. Marriott International stock jumped 4.3% after reporting stronger global hotel performance. CEO Anthony Capuano stated that business trends improved meaningfully from the spring, even in the Middle East where the war has had an impact.

Idexx Laboratories, a provider of diagnostic equipment for veterinarians, saw its shares surge 16.3%. The company beat analyst estimates for profit and revenue and raised its full-year 2026 forecasts. United Airlines, Southwest Airlines, and Carnival also benefited from the drop in fuel costs. United rose 6.5%, Southwest climbed 4.2%, and Carnival increased by 4.6%.

Not all movers were positive. Marvell Technology shares fell 6% after the company announced a deal to acquire Lumentum. Lumentum manufactures lasers and products that support AI and cloud computing infrastructure. Marvell proposed exchanging 4.5 of its shares for each Lumentum share, valuing the transaction at approximately $115 billion. Lumentum shares dropped 10.6% on the news.

Global markets showed mixed results. European indexes saw modest moves. In Asia, South Korea's Kospi index jumped 2.2% as tech giants strengthened. Chinese markets also recovered, with Shanghai indexes rising 1.1% and Hong Kong gaining 0.4%. Shanghai stocks had fallen more than 15% from their May peak by the end of October. The People's Bank of China stated on Monday that a new program would deploy roughly 100 billion yuan, or $15 billion, to support the market.

Economic data released Monday suggested the US manufacturing sector is growing faster than economists predicted. A measure of inflation in the same survey showed prices rising at a slower pace. These indicators suggest the economy is maintaining momentum despite high interest rates and inflation pressures.