U.S. Stock Markets Recover as Trump Signals Iran War Nearing End; Oil Prices Pull Back Sharply
U.S. equities staged a sharp intraday reversal on Monday after President Donald Trump indicated the military conflict with Iran may be approaching its conclusion, lifting markets from steep early losses and pulling oil prices back from their highest levels in four years.
Markets Reverse Course After Early Session Losses
U.S. equity markets closed higher on Monday after a volatile trading session driven by developments in the ongoing U.S.-Israel conflict with Iran. The S&P 500 rose 0.83% to close at 6,795.99, the Dow Jones Industrial Average added 239.25 points, or 0.5%, to end at 47,740.80, and the Nasdaq Composite gained 1.38%, settling at 22,695.95.
The recovery was notable given the depth of earlier losses. The Dow fell nearly 900 points at its session low, while the S&P 500 and Nasdaq each dropped as much as 1.5% before the turnaround.
The catalyst for the reversal came after President Donald Trump told a CBS News reporter that the war against Iran was “very complete, pretty much,” adding that the U.S. was “very far” ahead of his initially stated four-to-five-week timeframe. Trump also stated that ships were moving through the Strait of Hormuz and that he was “thinking about taking it over.”
Oil Prices Swing Wildly Before Pulling Back
Oil markets saw extreme volatility throughout the session. West Texas Intermediate (WTI) crude briefly surpassed $119 per barrel in overnight trading, its highest level since Russia’s invasion of Ukraine in 2022, before pulling back sharply to around $81 per barrel following Trump’s comments. International benchmark Brent crude similarly retreated to near $84 per barrel after hitting intraday highs above $100.
U.S. oil prices began the year below $60 per barrel.
The spike was driven by a near-complete halt in shipping traffic through the Strait of Hormuz, the narrow waterway between Iran and Oman through which roughly 20% of the world’s daily oil supply normally flows. Several major Gulf producers have cut output as a result. Iraq’s production from its three main southern oilfields has fallen approximately 70% to 1.3 million barrels per day, down from 4.3 million barrels per day prior to the conflict. Kuwait announced precautionary cuts, though did not specify the volume. The United Arab Emirates said it was managing offshore production levels carefully.
G7 Coordination Underway
G7 energy ministers are scheduled to hold a virtual meeting Tuesday morning to discuss a potential coordinated release of emergency oil reserves. Finance ministers from the same group met Monday and issued a joint statement saying they stood ready to take necessary measures, including supporting global energy supply through stockpile releases, though no decision was made.
The International Energy Agency, whose member states collectively hold approximately 1.2 billion barrels in strategic reserves, is also scheduled to hold an extraordinary meeting Tuesday to discuss a possible release of emergency stockpiles.
Semiconductor Stocks Provide Additional Support
Technology stocks contributed to the broader market recovery. Broadcom (AVGO: NASDAQ) advanced more than 4%, while Micron Technology (MU: NASDAQ) and Advanced Micro Devices (AMD: NASDAQ) each rose approximately 5%. Nvidia (NVDA: NASDAQ) climbed more than 2%.
Analyst Caution Persists Despite Rally
Despite the market’s recovery, analysts cautioned that significant uncertainty remains. Some on Wall Street had viewed $100 per barrel oil as a potential breaking point for economic growth and corporate earnings if sustained. John Luke Tyner, portfolio manager and head of fixed income at Aptus Capital Advisors, said the oil price spike may not have lasted long enough to materially damage the broader economy, and suggested prices could normalize in the $65 to $75 per barrel range if infrastructure damage proves limited.
BlackRock said in a note to clients Monday that while risks are real and financial market turbulence is likely, the oil supply disruption may prove short-lived if it lasts weeks rather than months. The firm said it continues to favor equities in the U.S. and Japan while maintaining an underweight position on long-term U.S. Treasury bonds.
Andy Lipow, president of Lipow Oil Associates, urged caution in interpreting Trump’s comments, noting it remained too early to draw firm conclusions about how Iran would respond and whether further attacks on oil infrastructure were likely in the coming hours.
