US stocks rallied sharply on Monday after the United States and Iran signed a peace agreement that ends their war and reopens the Strait of Hormuz, sending crude oil tumbling roughly 5% to two-month lows. The collapse in energy prices eased inflation fears and powered a sharp rally in technology stocks, with the Nasdaq 100 surging 2.9% to 30,485. The S&P 500 climbed 1.8% to 7,567, while the Dow Jones Industrial Average advanced 1.3% to 51,886. Adding to the market euphoria, a post from Elon Musk about Space Exploration Technologies Corp projected revenue could reach approximately $1T in 2030, significantly surpassing prior bullish estimates from Goldman Sachs Group Inc and Morgan Stanley.

President Donald Trump stated that ships were moving along the Southern 'Highway' and confirmed the authorization for the toll-free opening of the strait. Senior US officials indicated that traffic would rise immediately, though full reopening would take time due to mine removal, with the deal signed in Switzerland on June 19. West Texas Intermediate crude slid 5.3% to around $80.37 a barrel, while Brent dropped 5.0% to roughly $82.93.

Sector Performance

The Technology Select Sector SPDR Fund led all S&P 500 sectors with a 3.7% jump, while the Energy Select Sector SPDR Fund was the standout laggard, sliding 3.2% as crude collapsed. The VanEck Gold Miners ETF surged 7.5% alongside a bullion rally, and the U.S. Global Jets ETF climbed 4.5% as plunging fuel costs lifted carriers. International markets also reacted strongly, with Japan's stock market rising 5% and South Korea's climbing 5.2%.

Market Movers

Memory and chip names dominated the gainers. Western Digital Corp soared 14.3% after a wave of bullish analyst targets, while peers Micron Technology Inc and Sandisk Corp rose more than 6%. Entegris Inc jumped 10.7% on semiconductor-materials tailwinds. Intel Corp and Advanced Micro Devices Inc also saw significant gains. On the downside, Fox Corp cratered 16.6% after agreeing to acquire Roku Inc for $160 per share. Fiserv Inc slid 8.2% after its CEO abruptly stepped down, and Alcoa Corp dropped 9.7% as aluminum futures slid nearly 5%.

Commodities and Rates

The retreat in oil rippled through rates markets. The 10-year Treasury yield eased 3 basis points to about 4.46%, while the 2-year fell 4 basis points to 4.05%. Gold rallied, with spot bullion up 3.2% to about $4,357 an ounce as falling yields and a softer dollar burnished the metal's appeal. Bitcoin also saw buying interest in early trade.

The number of Americans not in the labor force who currently want a job rose to 6.2 million in May, exceeding levels recorded during the 2008 Financial Crisis. Analysis by The Kobeissi Letter indicates that labor market conditions are deteriorating beneath the surface, with this specific demographic of hidden job seekers surging by 1.2 million since March 2023.

In May alone, the count of sidelined workers increased by 76,000, marking the fourth consecutive monthly rise. This trend has added a total of 349,000 people to the category in recent months. As a percentage of total employment, this shadow group reached 3.8%, the second-highest rate since October 2021.

Comparison to Historical Recessions

The current 3.8% rate is already higher than the 3.6% peak witnessed during the 2001 recession. It is approaching the 4.3% high watermark of the 2008 economic crash. These individuals are not actively looking for work, meaning they do not trigger official unemployment alarms, yet their growing ranks are significant.

Market Performance

Despite the weakening labor data, major US indices showed gains year-to-date. The S&P 500 index advanced 8.35%, while the Nasdaq Composite index was up 11.42% and the Dow Jones gained 5.83%.

The SPDR S&P 500 ETF Trust (NYSE: SPY) and Invesco QQQ Trust ETF (NASDAQ: QQQ) closed higher on Friday. The SPY ended up 0.54% at $741.75, while the QQQ was higher by 0.59% to $721.34. The State Street SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA) closed 0.73% higher.