Wall Street Edges Higher Amid AI Frenzy, Despite Ongoing Iran Crisis

US Stocks Close Slightly Higher Despite Earnings-Driven Fervor Easing

U.S. stocks closed slightly higher on Monday, with AI optimism fueling upward momentum even as the earnings-driven fervor of the recent rally eased in the home stretch of reporting season. The rise in crude prices, stoked by Middle East tensions, also contributed to the gains, but inflation worries remain a concern.

The Dow Jones Industrial Average rose by 95.31 points, or 0.19%, to 49,704.47, while the S&P 500 gained 13.91 points, or 0.19%, to 7,412.84. The Nasdaq Composite gained 27.05 points, or 0.10%, to 26,274.13, marking its latest in a series of all-time closing highs.

Semiconductors outshone other sectors, with the PHLX Semiconductor index jumping 2.6%. This suggests that the AI wave is showing few signs of abating. However, some market watchers believe that the rally is about to run out of momentum. Investor Michael Burry warned on Monday that stocks are likely to crash, citing that the market has "jumped the shark."

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First-quarter reporting period is nearing the finish line, with 440 of the companies in the S&P 500 having reported. Of those, 83% have topped earnings expectations, according to LSEG IBES. As of Friday, analysts estimated first-quarter S&P 500 earnings growth, on aggregate, of 28.6% year-on-year, nearly double the 14.4% first-quarter growth estimates as of April 1.

The strength of the rally largely is a function of earnings growth, which is superb, said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. Market watchers are looking ahead to next week, when the big-box retailers report, to get a sense of if there's any change in consumer spending behavior following elevated prices at the gas pump.

However, focus returns to macroeconomics and geopolitical developments. President Donald Trump dismissed Iran's response to a U.S. peace proposal, causing crude prices to spike and stoking concerns that a prolonged conflict will keep putting upward pressure on inflation, particularly at the gasoline pump.

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Investors will pay close attention to economic indicators this week, particularly the Labor Department's Consumer Price Index and the retail sales report from the Commerce Department, scanning the data for signs that the ongoing surge in energy prices is metastasizing into broader inflation or affecting consumer spending.

On Monday, Intel rose 3.6% after surging 14% on Friday on a report of a preliminary chip-making agreement with Apple, while peer Qualcomm jumped 8.4% to a record high. Media major Fox Corp rose 7.6% after beating third-quarter revenue estimates. However, some airline stocks slipped as rising oil prices threatened to squeeze margins.

Declining issues outnumbered advancers by a 1.08-to-1 ratio on the NYSE. There were 567 new highs and 144 new lows on the NYSE. On the Nasdaq, 2,129 stocks rose and 2,704 fell as declining issues outnumbered advancers by a 1.27-to-1 ratio. The S&P 500 posted 39 new 52-week highs and 42 new lows, while the Nasdaq Composite recorded 157 new highs and 164 new lows.

Volume on U.S. exchanges was 21.42 billion shares, compared with the 17.99 billion average for the full session over the last 20 trading days.