U.S. stocks moved higher on Monday, with the S&P 500 approaching record territory as investors looked past another sharp sell-off in global bond markets.
Lower oil prices and continued momentum from the previous trading session helped support sentiment. Gains in technology, communication services and materials stocks also lifted the broader market.
S&P 500 Nears Record High
By 15:15 ET, the S&P 500 had risen around 0.9% to 7,789.50 points.
The index was within reach of its all-time intraday high of 7,816.70 and record closing level of 7,798.99, both set on August 13.
The Nasdaq Composite gained approximately 1.3% to 27,531.25 points, reaching a fresh intraday record.
Meanwhile, the Dow Jones Industrial Average advanced about 0.4% to 51,368.12 points.
Technology and Materials Stocks Lead Wall Street Higher
Strong performances from technology, communication services and materials shares helped offset concerns about rising borrowing costs.
Despite several major economic challenges this year, including higher oil prices, trade tensions and inflation pressures, the S&P 500 has gained more than 12%.
Investors have also become more optimistic that the Federal Reserve may avoid another immediate interest rate hike.
Weak Jobs Data Reduces Fed Rate Hike Expectations
Expectations for another Federal Reserve rate increase have declined sharply following weaker U.S. labor market data.
At the beginning of last week, markets were pricing in roughly a 70% chance of an October rate hike.
By the end of the week, those odds had fallen to around 20%.
A weaker-than-expected nonfarm payrolls report and moderating inflation data encouraged traders to expect the Fed to remain patient.
JPMorgan analysts said they continue to expect another rate hike in December, although stronger inflation data could still increase the probability of an October move.
Treasury Yields Remain Near Multi-Decade Highs
Bond markets remain a major source of concern despite strength in U.S. equities.
The benchmark 10-year U.S. Treasury yield climbed around 3.9 basis points to 5.319%.
The 30-year Treasury yield rose about 4 basis points to 5.670%.
Both remained near their highest levels since the early 2000s.
The rise in global borrowing costs has been driven by several factors, including inflation concerns, heavy government debt issuance, tighter monetary policy and rising borrowing requirements linked to artificial intelligence infrastructure investment.
France Adds Pressure to Global Bond Markets
Stress in France has added another layer of uncertainty to global fixed-income markets.
The spread between French and German 10-year government bond yields widened sharply last week.
Deutsche Bank strategist Jim Reid said the Franco-German spread increased by 32 basis points to 141 basis points, its largest weekly widening in available data going back to 1990.
France’s benchmark 10-year yield also recently reached its highest level since July 2002.
The rise came as investors assessed France’s proposed 2027 budget and the country’s broader fiscal position.
France is targeting a public deficit of around 5% of GDP through approximately €54 billion in planned spending cuts.
However, the country’s deficit is projected to reach around 5.4% of GDP this year, while public debt is approaching 120% of GDP.
Fed Minutes Could Influence Markets
Investors will also closely monitor the minutes from the Federal Reserve’s latest policy meeting.
The minutes could provide further insight into how policymakers view the current interest rate cycle.
Recent comments from Fed officials have suggested that policymakers are not in a rush to tighten monetary policy again.
New York Fed President John Williams indicated that another rate increase later in the year could still be appropriate.
Fed Vice Chair Philip Jefferson also suggested that policymakers may need more time before deciding on their next move.
U.S. Services Sector Growth Slows
Monday’s economic calendar included the Institute for Supply Management’s latest U.S. services report.
Activity in the services sector slowed in September compared with August, although it remained in expansion territory.
At the same time, the prices-paid component increased to its highest level since July 2022.
That rise suggests inflationary pressures have not completely disappeared, potentially complicating the Federal Reserve’s policy outlook.
Oil Prices Ease as Middle East Exports Recover
Oil prices traded mostly lower on Monday despite continued tensions in the Middle East.
Brent crude was down around 0.3% near $100 per barrel.
Energy markets continued to monitor fighting between Iran-backed Houthi forces and Yemen’s Saudi Arabia-backed government.
Yemeni government forces launched an operation to recapture territory near the Bab el-Mandeb Strait, a strategically important shipping route linking the Red Sea and Gulf of Aden.
Middle East Oil Supply Shows Signs of Improvement
Oil prices have also faced pressure from signs that Middle East crude exports are recovering.
Kpler data showed regional exports reached at least 16.5 million barrels per day in September, returning near levels seen before the Iran conflict.
Approximately 40% of regional crude exports are now leaving without passing through the Strait of Hormuz, compared with around 17% before the conflict.
TankerTrackers.com also estimated that Middle East exports averaged roughly 18.13 million barrels per day between September 25 and October 1.
That was only about 3.2% below pre-war levels.
G7 Emergency Oil Release Eases Supply Concerns
G7 countries also agreed to release 100 million barrels of crude oil and diesel from emergency reserves.
The group also decided to avoid new energy export restrictions.
The move is intended to ease global supply pressures and help prevent another sharp rise in energy prices.
Lower oil prices could provide additional relief for inflation expectations and help support equity markets.
For now, U.S. stocks remain close to record highs even as bond yields stay elevated and fiscal concerns continue to create volatility across global markets.
