The first trading session of August belonged to mega-cap technology stocks, as investors built on last week's strong earnings-driven momentum and embraced easing geopolitical tensions. The S&P 500 rose 1.5%, closing above the 7,600 level for the first time since June 2, while the Nasdaq Composite climbed 2.1% and the DJIA advanced 1.3% to notch an all-time closing high.

Leadership once again came from the market's largest companies. Six of the seven "Magnificent Seven" components finished firmly higher, lifting the Vanguard Mega Cap Growth ETF 2.2%. The communication services sector (+4.3%) paced the market as Alphabet (GOOG 372.47, +15.82, +4.44%) extended its recovery from a recent post-earnings selloff and Meta Platforms (META 590.24, +33.53, +6.02%) continued its rebound from multi-month lows.

The consumer discretionary sector (+2.7%) also turned in a strong performance as Tesla (TSLA 322.08, +10.87, +3.49%) attracted another round of buy-the-dip buying, while Amazon (AMZN 284.02, +12.44, +4.58%) built on last week's earnings-fueled surge and became the latest U.S. company to surpass a $3 trillion market capitalization.

The top-weighted information technology sector (+1.6%) was another standout, supported by continued strength in Microsoft (MSFT 487.65, +22.93, +4.93%) following last week's earnings report and a solid gain in NVIDIA (NVDA 206.64, +5.89, +2.93%), which reclaimed its 50-day moving average (205.85).

The sector steadily improved throughout the session due to a sharp reversal in semiconductor stocks. After opening with losses approaching 3%, the PHLX Semiconductor Index fought back to finish 1.1% higher, while software shares also enjoyed a strong session, lifting the iShares Expanded Tech-Software Sector ETF (IGV) 3.0%.

Investors now turn their attention to another busy stretch of tech earnings, with Palantir Technologies (PLTR 125.65, +2.59, +2.10%) set to report after the close, while Advanced Micro Devices (AMD 484.64, +8.49, +1.78%) and several memory companies including Sandisk (SNDK 1288.03, +73.20, +6.03%) report in the coming days.

Although mega-cap technology once again accounted for much of the index-level advance, participation remained healthy across the broader market. The S&P 500 Equal Weight Index climbed 1.0%, eight of the 11 S&P 500 sectors finished higher, and advancers comfortably outpaced decliners throughout the session. Smaller-cap stocks also participated, with the Russell 2000 rising 1.7% and the S&P Mid Cap 400 gaining 1.1%.

Lower oil prices provided another tailwind for equities. WTI crude oil futures settled $4.21 lower (-5.0%) at $80.36 per barrel after President Trump called off planned strikes against Iran. Reports also indicated that discussions between U.S. and Iranian officials remain ongoing, although Iranian officials have continued to publicly downplay or deny the extent of those talks. The energy sector (-1.5%) finished as the session's primary laggard, with Exxon Mobil (XOM 155.05, -0.39, -0.25%) and Chevron (CVX 193.18, -3.65, -1.85%) also pressured after President Trump said oil companies were earning excessive profits and should lower retail gasoline prices.

Elsewhere, the consumer staples (-0.3%) and health care (-0.2%) sectors posted modest losses as investors rotated away from more defensive areas of the market in favor of higher-growth opportunities.

The market's leadership remained firmly tilted toward mega-cap technology stocks, but today's session also offered encouraging signs beneath the surface. Solid breadth, a sharp recovery across semiconductor stocks after an early selloff, and easing geopolitical concerns combined to give equities a strong start to August, leaving the S&P 500 at its highest closing level in nearly two months as another busy week of earnings gets underway.

U.S. Treasuries began August with a rally that lifted the 10-year and 30-year note yields off their worst levels of the year. The 2-year note yield settled down four basis points to 4.25%, and the 10-year note yield settled down six basis points to 4.69%. 

• Russell 2000: +20.2% YTD
• S&P Mid Cap 400: +15.0% YTD
• Nasdaq Composite: +11.5% YTD
• S&P 500: +11.0% YTD
• DJIA: +10.6% YTD

Reviewing today's data:

• July S&P Global U.S. Manufacturing PMI - Final 53.9; Prior 53.8
• June Construction Spending -0.1% (Briefing.com consensus 0.3%); Prior was revised to 0.0% from 0.1%
  • The key takeaway from the report is that the softness was driven entirely by residential spending.
• July ISM Manufacturing Index 55.6% (Briefing.com consensus 54.0%); Prior 53.3%
  • The key takeaway from the report is that manufacturing activity picked up steam in July, with the PMI logging its highest reading since May 2022.