Wall Street rallies as US-Iran deal sends oil lower, Dow closes at record high

NEW YORK: Wall Street extended its gains on Monday, with the Dow Jones Industrial Average closing at a record high and the Nasdaq surging more than 3%, as a preliminary agreement between the United States and Iran eased concerns over inflation and energy prices.

Investor sentiment improved after reports that Washington and Tehran had reached a framework agreement to end hostilities and reopen the Strait of Hormuz, a key global oil shipping route. The deal is expected to be formally signed in Switzerland later this week.

The prospect of restored oil flows from the Middle East pushed crude prices sharply lower. US crude futures settled down 4.9%, reaching their lowest level since March, helping to ease fears of energy-driven inflation and supporting risk appetite across financial markets.

The Dow Jones Industrial Average rose 468.77 points, or 0.92%, to close at 51,671.03. The S&P 500 gained 122.83 points, or 1.65%, to finish at 7,554.29, while the Nasdaq Composite jumped 795.10 points, or 3.07%, to 26,683.94, marking its strongest daily percentage gain since March 31.

Technology stocks led the rally as lower oil prices reduced concerns about future interest rate increases. The S&P 500 technology index advanced 3.4%, while the Philadelphia Semiconductor Index climbed more than 5% to a record close.

Nvidia gained 3.5%, while Micron Technology surged 10.5% after brokerages raised their price targets for the company.

SpaceX shares rose 19.6% in their second day of trading following the company's blockbuster initial public offering. The stock closed at $192.46, well above its IPO price of $135, after the company's valuation exceeded $2 trillion.

Lower oil prices also lifted transport-related stocks. United Airlines gained 3.9%, while cruise operators Norwegian Cruise Line and Carnival Corporation rose 3.7% and 3.2%, respectively.

The energy sector was the only major laggard, with the S&P 500 energy index falling 3.6% as oil prices retreated.

Investors are now focused on the US Federal Reserve's policy meeting later this week. Markets broadly expect interest rates to remain unchanged, although traders continue to price in the possibility of a rate increase later in the year.

Meanwhile, the CBOE Volatility Index, often referred to as Wall Street's fear gauge, declined for a third consecutive session, reflecting reduced market anxiety following the US-Iran agreement.