U.S. stocks rallied sharply Monday, sending the Dow Jones Industrial Average to a record and bringing the S&P 500 within a fraction of its all-time high as a steep decline in oil prices eased fears of another inflation shock.

The Dow climbed 693.38 points, or 1.3%, to close at 53,178.41. The S&P 500 gained 110.78 points, or 1.5%, to 7,600.50, only about 0.1% below its record closing level of 7,609.78. The technology-heavy Nasdaq Composite advanced 540.04 points, or 2.1%, to 25,913.90. The Russell 2000 index of smaller companies rose 1.7% to 2,981.91, underscoring the breadth of the advance beyond the largest technology companies.

The rally marked a strong start to August following a volatile July in which investors repeatedly reassessed the economic consequences of the conflict involving the United States and Iran. MarketWatch reported that the Dow, S&P 500 and Nasdaq were headed for their strongest first trading day of a month since October 2022.

The immediate catalyst was oil. Brent crude fell 4.7% to settle at $83.77 a barrel after President Donald Trump said he would delay additional strikes against Iran and indicated that discussions related to reopening the Strait of Hormuz would take place. Iran disputed that formal talks had been scheduled, leaving the diplomatic outlook uncertain. Nevertheless, traders treated the development as a possible step away from further escalation and supply disruption.

Oil had traded between roughly $72 and $102 a barrel during July as markets reacted to changing expectations about the security of Persian Gulf shipping. Because energy costs feed into transportation, manufacturing and consumer prices, the sudden retreat in crude reduced immediate pressure on inflation expectations.

Treasury yields moved lower alongside oil. The yield on the benchmark 10-year Treasury note fell to 4.68% from 4.75% late Friday. That decline supported equity valuations by reducing the relative attraction of government bonds and easing concerns about borrowing costs. The yield nevertheless remained well above the 3.97% level recorded before the conflict with Iran, keeping interest rates near the center of the market debate.

Communication services was the strongest of the S&P 500’s 11 sectors, rising 4.3% as Meta Platforms and Alphabet advanced. Energy was the weakest sector, falling 1.2% as lower crude prices reduced expectations for near-term revenue and profit among oil producers.

Amazon gained 4.6%, lifting its market capitalization above $3 trillion for the first time after the company’s earnings report the previous week. The move reflected continued demand for large technology companies connected to cloud computing, digital advertising and artificial intelligence. AI-linked shares have remained volatile, however, as investors debate whether rapidly expanding data-center investment will generate sufficient long-term returns.

Micron Technology illustrated that uncertainty. The memory-chip company’s shares moved from a decline of as much as 6.4% to a gain of 1.7% during Monday’s session before closing 0.8% higher. Even after the turbulent day, the stock remained up roughly 190% for the year, according to Associated Press reporting.

Companies with substantial fuel expenses were among the clearest beneficiaries of falling oil prices. United Airlines rose 5.8%, American Airlines gained 5% and Norwegian Cruise Line Holdings advanced 6.6%. Lower fuel costs can improve margins for airlines and cruise operators, although the financial benefit depends on how long prices remain lower and how much fuel each company has previously hedged.

Boeing jumped 8% after U.S. regulators certified the 737 MAX 7 for commercial service. The development removed a major regulatory obstacle for the smallest version of Boeing’s MAX family and strengthened expectations that the aircraft manufacturer could begin delivering planes that customers have awaited for years.

Tyson Foods gained 2.8% after reporting a quarterly profit that modestly exceeded Wall Street expectations. The company cited continued strength in chicken and prepared foods, which include the Jimmy Dean and Hillshire Farm brands. The result added to evidence that corporate earnings remained supportive of the broader market.

Not every earnings-related move was positive. Marriott International fell 7% after the hotel operator projected third-quarter profit below analysts’ expectations. The decline showed that investors remained willing to punish companies whose outlooks failed to match valuations, even during a broad risk-on session.

Overall earnings results have been stronger than analysts anticipated, though different data providers have produced varying estimates of aggregate profit growth. LSEG data cited by Reuters showed that 85.2% of the 304 S&P 500 companies that had reported through Friday exceeded analyst expectations. FactSet data cited by the Associated Press also indicated unusually strong year-over-year earnings growth among companies that had released results.

Monday’s economic data added to the positive tone. A report showed U.S. manufacturing growth accelerating to its strongest pace since 2022, offering evidence that industrial activity was improving despite elevated interest rates and geopolitical uncertainty. The combination of stronger business activity and lower oil prices supported industrial, transportation and consumer-oriented shares.

Market breadth was decisively positive. Advancing stocks outnumbered decliners by 2.62 to 1 on the New York Stock Exchange and by 3.01 to 1 on Nasdaq, according to Reuters. Trading volume reached approximately 19.36 billion shares across U.S. exchanges, above the 20-day full-session average of 17.66 billion.

Investors now face a busy calendar that could determine whether the rally develops into a sustained move toward new records. Additional earnings from technology, industrial and consumer companies will test the strength of corporate demand. Labor-market readings, culminating in the government’s employment report Friday, will influence expectations for economic growth and Federal Reserve policy.

Oil and Treasury yields are likely to remain the most immediate indicators. Continued declines could provide further support for stocks by improving the inflation outlook and lowering financing pressure. A renewed escalation involving Iran or disruption to the Strait of Hormuz could send energy prices and yields higher again, reversing the conditions that powered Monday’s rally.