S&P 500 climbs 0.8% as SaaS stocks lead tech rally

SaaS stocks surged at Monday's open, pushing the S&P 500 higher as investors rotated back into growth names on easing geopolitical fears.

The S&P 500 rose 0.8% to 7,413 as SaaS stocks rallied at the open, with ServiceNow gaining nearly 4% on easing U.S.-Iran tensions. The move marked a reversal from last week's tech-led selloff.

"The market is pricing in a lower geopolitical risk premium after weekend headlines suggested the cease-fire remains on track," said Ian Cooper, a market analyst at 247wallst.com. "That's driving a rotation back into the tech and growth names that got hit last week."

The Nasdaq 100 climbed 1.3% to 29,453, outperforming the Dow's 0.4% gain to 52,139. The SPDR S&P 500 ETF added $8.03, or 1.1%. Adobe rose 2% and Microsoft added 1.5%, while Comcast surged 24% after announcing plans to spin off NBCUniversal and Sky into a separate publicly traded company.

The rally comes during a holiday-shortened week, with markets closed Friday for Independence Day. Investors face a packed economic calendar including the June employment report, due Thursday, and fresh inflation data showing consumer prices above 4% for the first time in three years — a dynamic that could complicate Federal Reserve policy expectations.

Tech Leads as Defensives Lag

Technology stocks led Monday's advance after suffering their biggest weekly decline in months last week. The move higher coincided with a stabilization in oil prices as traders priced in a lower probability of prolonged conflict in the Middle East. The S&P 500's information technology sector rose more than 1%, while defensive sectors including utilities and consumer staples lagged.

Inflation Data Complicates Rate Outlook

The broader market backdrop remains uncertain. Inflation accelerated above 4% in the latest reading, the highest in nearly three years, raising questions about whether the Federal Reserve may need to raise interest rates. The U.S. 10-year Treasury yield edged higher as traders adjusted rate expectations. The Cboe Volatility Index remained elevated, as lingering uncertainty persisted despite Monday's gains.

The U.S. dollar index held steady as oil prices eased on the cease-fire hopes. Gold edged lower as risk appetite improved. The rally in risk assets was broad but selective, with the Russell 2000 of small-cap stocks adding 0.4%, lagging the Nasdaq's 1.3% gain.

This article is for informational purposes only and does not constitute investment advice.