U.S. stocks rallied on Monday, showing signs of recovery after last week’s significant losses, supported by strong earnings from banking giant Goldman Sachs.

In today’s trading, the Dow Jones Industrial Average was up 1%, while the S&P 500 was up 0.8% and the NASDAQ was up 0.5%.

Goldman Sachs attracts attention with its profits

Wall Street’s key indexes started the week positively, buoyed by strong earnings from investment bank Goldman Sachs (GS).

Goldman shares rose 5.6% after the bank reported a significant profit increase, driven by a recovery in underwriting and bond trading during the first quarter, boosting earnings per share to the highest levels since late 2021.

Stocks of Charles Schwab (SCHW) rose more than 3%, adding to the positive sentiment, even though first-quarter brokerage profit fell nearly 15% as higher interest on client deposits and loans offset the benefits of an increase in asset management fees.

Poor earnings from several major Wall Street banks had weighed down the market the previous week, marking the start of the first-quarter earnings season.

Elsewhere, Apple (AAPL) shares fell nearly 1% after data from research firm IDC indicated that the iPhone maker lost its top spot as the world’s number one manufacturer, after Samsung reclaimed the throne following a poor first quarter by Apple. 

Apple’s smartphone shipments declined nearly 10% during the first quarter of this year, a period in which worldwide shipments increased 7.8% to nearly 289.4 million devices.

Meanwhile, Tesla (TSLA) shares fell 1.3% following reports that the electric car maker might soon announce mass layoffs due to poor sales.

Iran-Israel conflict in the spotlight

During the corporate earnings season, concerns about a major conflict in the Middle East intensified when Iran launched a massive drone and missile strike on Israel. This attack was in retaliation for an alleged Israeli strike on an Iranian consulate in Damascus, Syria.

Although the attack appears to have caused minimal damage, it raises the possibility that other countries, such as the United States, could become involved in a much larger war.

The Israeli ministers also stated that retaliation would not be immediate, while Iran reported that its operation had been completed with no plans to take further action against Israel.

On Friday, the major indices suffered sharp declines, capping a dismal week: the DJIA fell 2.4%, marking its worst performance since March 2023. Similarly, the S&P 500 dropped 1.5%, its largest decline since October 2023, and the Nasdaq Composite fell 0.5%, its third consecutive week of losses.

Diminished optimism about a rapid US interest rate cut was the main drag on equity markets, as a string of weak inflation data caused investors to sharply lower their confidence in a June rate cut.