SynopsisWall Street rallied sharply on Monday, with the Dow hitting a record high as easing oil prices and strong tech earnings lifted investor sentiment. The Dow gained over 1%, while the Nasdaq surged more than 2% and the S&P 500 rose 1.5%, nearing its record high.ETMarkets.comWall Street rallied sharply on Monday, with the Dow hitting a record high. Wall Street indices rallied on Monday, with the Dow Jones Industrial Average closing at a record high level as falling oil prices and strong tech earnings boosted investor sentiment, despite prevailing caution over the massive selloff in chip stocks.The Dow Jones Industrial Average surged more than 1% to a new record high, closing at 53,178, while the Nasdaq soared over 2%. The S&P 500 jumped 1.5% to be just marginally away from its record high level, which it had hit earlier this year.Boeing shares rallied more than 8%, while Microsoft, Google-parent Alphabet and Amazon shares surged around 5% to lead gains on Dow Jones.What's behind Wall Street's sharp gains?The bullish market sentiment on Wall Street came after oil prices sharply declined following US President Donald Trump’s statement during the weekend that he has decided to postpone new strikes against Iran at the urging of allies in the region. Oil prices had soared to as high as $102 per barrel last month as new escalations in the Iran-US war sparked fresh oil supply concerns.The latest fall in oil prices helped push US treasury yields down. The yield on benchmark US 10-year notes fell 6.13 basis points to 4.684%. Notably, this came after it reached 4.747% on Friday, the highest since January 2025. The 30-year bond yield meanwhile fell 4.76 basis points to 5.2274%, after peaking at 5.2811% on Friday, the highest since 2007.What further supported the gains on Wall Street were robust quarterly earnings. Amazon shares jumped nearly 5% as the company's market cap surpassed $3 trillion for the first time ever after its earnings results last week. Investors are now eyeing the earnings of Elon Musk-led SpaceX, which on Tuesday will announce its first quarterly results since market debut. The shares of the company soared around 6%.Also read | Amazon enters $3 trillion club as AI optimism sweeps through Wall Street"The sharp drop in oil prices, due to Trump's cancelling severe attacks against Iran and hopes of a diplomatic resolution, set the ball rolling this morning," Reuters quoted Peter Cardillo, chief market economist at Spartan Capital Securities in New York, as saying. He added that the most of the earnings so far have beat expectations and guidance have been upbeat, further boosting sentiment. The report cited LSEG data as saying that nearly 85% of the firms have beat expectations this season.Why caution is warranted?Notably, Wall Street’s bullish start to August comes after the stocks were battered in July amid a sharp selloff in AI stocks, escalating US-Iran conflict and Fed’s rate uncertainties. The AI worries still loom over the market, with South Korea’s Kospi, which is being seen as the face of the massive upswings and downswings of the AI trade, falling sharply.Also read | 'Wait till payback time!': South Korean retail investors protest as govt apologises after Kospi crashes 40% in a monthA report last week that Fed Chair Kevin Warsh raised the idea of scheduling fewer rate-setting meetings added to concerns about less clarity around the American central bank’s rate trajectory. Markets are pricing in a 64.5% chance for a rate hike of at least 25 basis points at the Fed's September meeting, according to CME FedWatch data, cited by Reuters.While markets cheer the strong quarterly earnings and fall in oil prices, caution is still warranted. Oil prices inched higher on Tuesday after Iran pushed back on Trump’s claims. Iran’s Foreign Ministry spokesman, Esmail Baghaei, stated that there were no ongoing negotiations with the United States and that no meetings had been scheduled.(With inputs from agencies)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. 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