Dow Surges Over 500 Points as U.S.–India Trade Deal Boosts Markets; Oil and Gold Retreat

A Strong Start to February

If you were checking the markets on Monday, Feb. 2, 2026, you probably noticed a cheerful vibe on Wall Street. The Dow Jones Industrial Average jumped over 500 points, and the S&P 500 closed just shy of a record, all thanks to stronger-than-expected economic data and some big headlines on the international trade front.

Investors seemed relieved that the U.S. economy is showing signs of durability, even with uncertainty around inflation and interest rates. The cherry on top? President Donald Trump announced that the U.S. and India have reached a comprehensive trade agreement, sending a wave of optimism through the market.

Meanwhile, commodities weren’t as lucky. Oil and gold prices dipped, as investors rotated into stocks and away from traditional safe havens.

Manufacturing Data: A Reason to Smile

One of the key drivers behind Monday’s gains was solid manufacturing data for January. The purchasing managers’ index (PMI) — a measure of manufacturing activity — showed expansion, surprising some analysts who had expected a slowdown.

This positive data signals that the U.S. manufacturing sector may be stabilizing after months of muted growth, which, in turn, reassured investors that the broader economy remains resilient.

The news also had implications for monetary policy. With the economy holding up, the Federal Reserve may feel less pressure to hike rates aggressively, a point that tends to calm markets.

U.S.–India Trade Deal Sparks Optimism

While the economic data set a positive tone, it was the U.S.–India trade deal that really grabbed headlines. According to White House announcements:

U.S. tariffs on Indian goods will drop from 25% to 18%.

India will lower tariffs on a range of U.S. exports.

Sectors expected to benefit include energy, technology, and agriculture.

President Trump called the agreement a “transformative step” in U.S.–India relations and emphasized the potential for job creation and economic growth on both sides.

The announcement had an immediate effect on global markets: Indian stock indices jumped, and Wall Street investors responded positively, especially in sectors linked to international trade and manufacturing.

Major Market Moves

Here’s how the major indexes fared on Monday:

Dow Jones Industrial Average: +515 points (~1.1%), one of its strongest gains in recent weeks.

S&P 500: Rose nearly 37 points, just shy of setting a new record.

Nasdaq Composite: +0.5%, with tech bellwethers bouncing back.

Interestingly, small-cap stocks outperformed, a sign that investors were feeling a bit more adventurous and willing to explore beyond the largest companies.

Sector Highlights

Not all sectors performed equally:

Financials, industrials, and consumer staples led the charge, boosted by positive data and trade optimism.

Technology stocks gained, although chipmakers faced some headwinds.

Energy stocks lagged slightly as oil prices fell.

The Volatility Index (VIX), often called Wall Street’s “fear gauge,” dropped, reflecting reduced investor anxiety.

Commodities Take a Backseat

While equities rallied, commodities felt some pressure:

Oil prices retreated on forecasts of slower global demand and easing geopolitical risks.

Gold, traditionally a safe-haven asset, also fell as investors moved money into riskier assets like stocks.

This rotation away from commodities into equities is a classic “risk-on” market behavior, showing investors’ confidence in economic growth and global trade developments.

What’s Next for Investors?

As markets start February on a strong note, analysts will keep a close eye on upcoming economic reports, including services-sector data and the next jobs report.

Traders are also watching for the details of the U.S.–India trade deal, especially the implementation timeline and potential impact on corporate earnings. If executed well, the deal could spur long-term growth and investment opportunities, particularly in sectors tied to international commerce.

Takeaway

Monday’s market action shows that good news on multiple fronts can drive a strong market rally. Positive manufacturing data combined with a headline-grabbing trade deal created a “perfect storm” for investor optimism, lifting major indexes to new highs.

However, the dip in oil and gold reminds us that markets are always balancing risk and reward, with investors rotating funds based on the latest economic signals.

For now, February looks promising for equities, but investors will need to monitor both U.S. economic indicators and global trade developments to gauge whether this momentum can continue.