Following a meeting between President Trump and Iran, where they discussed and halted attacks on Iranian power plants and energy infrastructure, investors are hopeful that the conflict in the Middle East may soon come to an end. This optimism led to a surge in the stock market.
On Monday morning, the Dow Jones Industrial Average surged by 829 points, an increase of 1.8%. The S&P 500 index rose by 1.4% and the Nasdaq Composite index increased by 1.6%.
Before Trump’s announcement, uncertainties surrounding the soaring oil prices and the duration of the Iran conflict had led to predictions of a further market decline. However, following Trump’s speech, Dow futures briefly soared by over 1000 points, and oil prices fell. The price of West Texas Intermediate crude oil futures dropped by more than 7% to around $90 per barrel, while the international benchmark Brent crude oil price declined by over 8% to $102 per barrel.
Trump posted on Truth Social that the dialogue between the U.S. and Iran over resolving hostilities in the Middle East has been very productive in the past two days. The discussions will continue this week, and he has instructed the Department of Defense to delay military strikes on Iranian power plants and energy infrastructure by five days, depending on the success of the talks and negotiations.
The Iran conflict has entered its fourth week, with Trump issuing an ultimatum over the weekend, threatening to attack Iranian power plants if the Strait of Hormuz is not reopened within 48 hours. Iran responded by warning of attacks on U.S. infrastructure in the Gulf region, including energy and desalination facilities.
According to CNBC, Jeff Kilburg, founder and CEO of KKM Financial and manager of the Essential 40 Stock ETF (ESN), stated that if the dialogue serves as the foundation for peace in the Middle East, the stock market could potentially reach historic highs once again.
Before the market rebound on Monday, both the Dow and the Nasdaq faced risks of a correction. As of last Friday, both indices had fallen by approximately 9.8% from their highs. The S&P 500 index also experienced a 7% drop. The market rebound on Monday was broad-based, with cyclical stocks such as banks and industrials, as well as technology stocks, all posting significant gains. JPMorgan Chase rose by over 2%, Morgan Stanley by 3%, Caterpillar by 3%, and Dell by 1%. Nvidia and Apple both saw their stock prices rise by 2%. Due to the decrease in oil prices, airline stocks like Delta Air Lines and United Airlines increased by 3% and 4%, respectively. Among the few declining stocks were energy companies, with Exxon Mobil and Chevron seeing a decrease in their stock prices.
The ongoing Iran conflict has continued to weigh on the market, causing both the Dow and Nasdaq to drop by around 2% last week. The S&P 500 index fell by 1.5%, with the Dow experiencing consecutive declines for the first time since 2023.
Art Hogan, Chief Market Strategist at B. Riley Wealth Management, stated that the market has been desperate for any good news, and this seems to be the best news to anticipate at the moment. If there is downward pressure on energy prices, the market, like a coiled spring, is eager to find any reason to rise.