US stock markets ended modestly higher on Monday as strong corporate earnings and optimism around artificial intelligence-driven growth outweighed investor concerns over the ongoing Iran conflict and rising oil prices. Market participants are now closely watching the upcoming US consumer inflation data, which is expected to provide further clues about the Federal Reserve’s interest rate path.

The benchmark S&P 500 closed 0.2 per cent higher after trimming earlier gains as crude oil prices strengthened during the session. The tech-heavy Nasdaq-100 advanced 0.3 per cent, while the Dow Jones Industrial Average also rose 0.2 per cent. Energy stocks emerged as the top-performing sector after US President Donald Trump described Iran’s latest response to a proposed ceasefire plan as “totally unacceptable” and warned that the truce was on “life support”.

Investor sentiment remained supported by strong first-quarter earnings and growing enthusiasm around artificial intelligence investments. Jean Boivin, head of the BlackRock Investment Institute, said markets were simultaneously pricing in AI-driven economic expansion and the impact of Middle East energy disruptions. According to him, large-scale investments in AI infrastructure and data centres are helping offset the economic drag caused by higher oil prices and geopolitical instability.

Also Read: S&P 500 And Nasdaq Fall From Record Highs As Markets Await Iran Response

Attention is now turning to Tuesday’s Consumer Price Index (CPI) report, which investors expect could show inflationary pressure linked to rising fuel costs and supply disruptions. A survey by 22V Research indicated that many investors anticipate hotter-than-expected inflation data, with a majority believing the Federal Reserve System may need to maintain or even raise interest rates to control price increases.

Despite geopolitical uncertainty, several major Wall Street firms have raised their year-end targets for the S&P 500 after stronger-than-expected corporate earnings. CFRA increased its target for the index to 7,730 points from 7,400, citing resilient consumer spending and continued AI-related investment. Meanwhile, Yardeni Research now holds one of the most bullish forecasts on Wall Street, projecting the S&P 500 to end the year at 8,250 points.

Ed Yardeni, president of Yardeni Research, said consensus earnings expectations for current and future years had risen at an unusually rapid pace, creating what he described as an “earnings-led melt-up” in equity markets. Analysts have increasingly compared the rally in AI and semiconductor stocks to the late-stage technology boom of the late 1990s, with some cautioning that valuations in certain sectors may be rising faster than underlying fundamentals.

Also Read: S&P 500 And Nasdaq Fall From Record Highs As Markets Await Iran Response