U.S. stocks closed higher on Monday, August 4, with major technology stocks leading the charge and the Dow Jones Industrial Average hitting a new all-time closing high, according to overnight trading data. Oil prices fell after President Donald Trump canceled a planned strike on Iran.

The Dow gained 693.14 points, or 1.32%, to close at 53,178.17. The Nasdaq Composite rose 540.04 points, or 2.13%, to 25,913.90. The S&P 500 advanced 110.76 points, or 1.48%, to 7,600.48. Communication services and technology sectors were the primary drivers of the rally.

Meta Platforms closed 6% higher on the day. Amazon also surged 4.6%, reaching a record market capitalization of $3 trillion. Meanwhile, Nvidia gained 3%, while Alphabet and Microsoft each rose about 5%.

Monday's action marked a sharp reversal from the turbulent July performance of tech stocks, during which the State Street Technology Select Sector SPDR ETF (XLK) plunged nearly 8% as investors fretted over corporate spending on artificial intelligence. Large-cap tech names led the rebound.

Jed Ellerbrock, portfolio manager at Argent Capital Management, noted that investors are turning bullish on tech again as earnings reports exceed expectations. "The market is pricing in the expectation that the massive capital expenditures by tech giants are generating attractive investment returns," Ellerbrock said. "Semiconductor and data center capital expenditure beneficiary stocks doubled or more in the second quarter, then fell sharply in July, but the underlying fundamental facts haven't changed throughout: demand for accelerated computing far exceeds supply, and the gap hasn't narrowed." He added, "Cloud computing giants are in a very strong position, and semiconductors remain in a rapid growth mode."

Falling oil prices also added momentum to the market. International Brent crude futures dropped 5% to $83.46 per barrel. West Texas Intermediate (WTI) crude futures slid more than 7% to $78.59 per barrel. Trump stated over the weekend that he had canceled a planned strike on Iran, adding that negotiations between the two countries would resume on Monday. U.S. media reported last Friday that the president was preparing for a new round of strikes as hopes for a negotiated end to the war waned and energy prices surged.

Michael Monahan, partner and portfolio manager at Founder ETFs, suggested that signals of the U.S. backing down from its earlier threats toward Iran could also be driving the stock market higher, alongside signs of easing pressure on AI-related stocks. "The pressure from the AI sell-off has dissipated, coinciding with the liquidation of 'situational awareness' positions last week, and then, most importantly, the increased concerns over further instability in the Middle East ahead of the weekend," Monahan said. "Although these concerns fluctuate and seem to repeat weekly, the tone and broad narrative do seem to be saying: we will try to resolve this."

Treasury yields also fell as concerns about inflation eased slightly. The benchmark 10-year Treasury yield declined 6 basis points to around 4.68%. Despite this, Adam Crisafulli, founder of Vital Knowledge, wrote that investors are still keeping their enthusiasm in check because "we have been through this before," and the conflict likely has a long way to go before reaching a resolution (if one is even possible).

Monday marked the first trading day of August, with major indexes seeking stability after a volatile July.