Stocks gain as megacaps lift Wall Street near records again

Stocks climbed with bonds as easing Middle East tensions pushed oil prices lower, reducing inflation worries before key US jobs data.

The S&P 500 rose about 1.5%, leaving the index close to its record level, while Treasury yields declined after a volatile stretch in bonds. US crude settled near $80 as traders marked down the immediate risk of disruption in Middle East energy flows.

Oil reprieve lifts megacaps

The day’s rally was driven by a cleaner inflation read-through from oil and a return of demand for large technology shares. A megacap stock gauge advanced 4%, and Amazon.com Inc. crossed $3 trillion in market value, placing the company deeper into the small group of US corporations with the largest equity valuations.

Lower oil prices matter for markets because energy costs can feed into headline inflation, household spending, transport costs and central bank expectations. When crude falls during a geopolitical scare, investors often treat it as relief for both corporate margins and interest-rate sensitive valuations.

The diplomatic signal came after Iran indicated talks were making progress on getting more vessels through the Strait of Hormuz. President Trump said he had called off what he described as a major attack on Iran and linked the next phase of discussions to nuclear issues.

“We’re talking about the strait, the opening of the strait, having it open literally by tomorrow, completely open, and that’s phase one,” Trump said. He added that phase two would include denuclearization talks.

Factory data shifts the burden

The market’s next test is domestic data, not only diplomacy. A July manufacturing report showed US factory activity growing at its quickest pace in more than four years, with demand firm, output rising and companies adding workers.

That matters for the Federal Reserve because stronger activity can support earnings while also complicating the case for easier policy if labor demand stays hot. Traders are now balancing a friendlier oil backdrop against the possibility that resilient economic numbers keep rate expectations from falling too far.

Ian Lyngen at BMO Capital Markets said geopolitics is again shaping the macro backdrop and giving dip buyers a reason to return. Chris Larkin at E*Trade from Morgan Stanley warned that the uneven pattern of US-Iran diplomacy could leave earnings and jobs reports to carry the bullish case this week.

Scott Rubner of Citadel Securities said the forces behind this year’s record-setting US equity run remain in place after a reset in speculative retail trading. “Markets are transitioning from a flow-driven environment back to one increasingly dictated by earnings, corporate demand, and the macroeconomic backdrop,” he wrote.

Corporate headlines widen the trade

Company news gave investors more to price beyond oil and rates. Boeing Co. received Federal Aviation Administration approval for the 737 Max 7, closing a prolonged certification process that had been reshaped by two fatal crashes and later quality failures at the aircraft maker.

In pharmaceuticals, AstraZeneca Plc has examined a potential purchase of Bristol-Myers Squibb Co., people familiar with the matter said. Such a deal, if pursued and completed, would rank among the largest transactions in the drug industry and could reshape competitive positioning in oncology and specialty medicines.

Consumer and travel names showed a less uniform picture. Marriott International Inc. said 2026 room growth would probably land near the low end of prior guidance because of construction delays in the Middle East, while AMC Entertainment Holdings Inc. reported its highest total weekend revenue after the opening of Spider-Man: Brand New Day.

Tyson Foods Inc. cut its annual profit outlook, pointing to the persistence of a historic cattle shortage in the US beef market. The warning shows how supply constraints in food can remain a company-level earnings problem even when broader energy costs ease.

Three paths for markets

If the Strait of Hormuz remains open and crude stays near recent levels, the global macro effect would likely be a softer inflation impulse from energy. For Amazon and other megacaps, that would support valuations through lower rate pressure, while airlines, retailers and manufacturers would benefit from improved cost assumptions.

If US-Iran diplomacy stalls and oil rebounds, the mechanism reverses: inflation anxiety rises, bond yields could face renewed pressure and equity multiples become harder to defend. Amazon would be exposed through the rate sensitivity of growth stocks, while transport, chemicals and travel companies would face more direct fuel-cost pressure.

If energy risk fades and economic data takes over, jobs, factory demand and earnings will set the market’s direction. In that scenario, Amazon’s $3 trillion valuation becomes a test of whether corporate demand can justify megacap prices, while the wider market must show that gains can broaden beyond a narrow technology-led advance.