S&P 500 and Dow edge higher as investors assess Middle East talks

The S&P 500 and Dow Jones edged higher on Monday, supported by technology and financial stocks, while investors assessed developments in the latest round of negotiations between the United States and Iran.

Iran deal developments

Mediators said US and Iranian officials made "encouraging progress" during the first round of talks, which ended in Switzerland early on Monday, despite continued tensions over Lebanon and the Strait of Hormuz.

Memory chip stocks rose, with Micron Technology and SanDisk gaining around 3% each.

The Philadelphia Semiconductor Index also climbed 1.3% to a fresh record high. Intel shares rose 2%, while Nvidia gained 1%.

Among the 11 major sectors in the S&P 500, seven advanced, led by financial services, which gained 1%.

By contrast, communication services was among the laggards, falling 2.3%. Shares of Alphabet and SpaceX declined 3.8% and 7.9%, respectively, weighing on the Nasdaq.

Oil prices fell by as much as 2% after Washington and Tehran agreed during the talks on a roadmap to reach a final agreement within 60 days.

Hopes for a peace agreement helped Wall Street's three major indexes end last week with strong gains on Thursday, with the Nasdaq rising 2.4% as technology stocks continued to lead markets.

Dan Coatsworth, Head of Markets at AJ Bell, said: "Although markets have shown resilience in recent weeks amid hopes for a resolution to the Middle East conflict and avoiding a prolonged high-inflation environment, the conflict remains unresolved, meaning investors have not yet fully shifted into risk-on mode."

Index performance

At 9:53 a.m. ET, the Dow Jones Industrial Average rose 261.38 points, or 0.51%, to 51,826.08.

The S&P 500 gained 23.77 points, or 0.32%, to 7,524.35.

The Nasdaq Composite slipped 1.52 points, or 0.01%, to 26,515.06.

Optimism surrounding artificial intelligence has supported Wall Street's recent gains, while a relatively strong economy and hopes for an end to the four-month Middle East conflict have also broadly helped markets.

The next test for the rally will be Micron's quarterly results on Wednesday, after shares of the memory chipmaker have surged around 300% since the start of the year.

Inflation and the Fed

Investor attention this week is focused on Thursday's personal consumption expenditures (PCE) price index, the Federal Reserve's preferred measure of underlying inflation.

A stronger-than-expected reading could reinforce expectations for a more hawkish Fed stance after Chair Kevin Warsh emphasized the need to control inflation at last week's meeting.

Markets are currently pricing in a 25-basis-point interest rate hike by the Federal Reserve in September, according to LSEG data.

The two-year Treasury yield, which reflects short-term interest rate expectations, also rose to its highest level since the beginning of 2025 at 4.230% during the session.

Investors will also monitor remarks from Federal Reserve officials this week, including New York Fed President John Williams and Chicago Fed President Austan Goolsbee, for signals on monetary policy.

Among individual stocks, Apogee Therapeutics jumped nearly 47% after AbbVie announced it would acquire the company for $10.9 billion in cash. AbbVie shares rose 4.7%.

Advancing stocks outnumbered decliners by a ratio of 1.2 to 1 on the New York Stock Exchange and 1.49 to 1 on the Nasdaq.

The S&P 500 recorded 19 stocks at 52-week highs and 19 at 52-week lows.

The Nasdaq Composite recorded 103 stocks at 52-week highs and 74 at 52-week lows.