Wall Street welcomed a restrained Iranian response to US airstrikes over the weekend — as well as fresh signals from the Federal Reserve that interest rates may soon fall.
The Dow Jones Industrial Average jumped 375 points, or 0.9%, to 42,581, while the S&P 500 gained 57 points, or 1%, to reach 6,025.
The Nasdaq advanced 183 points, or 0.9%, to 19,630.
The rally was fueled in part by relief that Iran’s retaliatory strike — an intercepted missile barrage targeting a US base in Qatar — was more symbolic than escalatory. Traders viewed the limited response as a sign that the Middle East conflict may not spiral into a wider war that would threaten energy infrastructure in the region.
On Truth Social, President Trump called on “everyone” to help keep oil prices low, warning that higher prices would “play into the hands of the enemy.”
Markets also took comfort from remarks by Federal Reserve Governor Michelle Bowman, who signaled she would support a rate cut at the Fed’s next policy meeting in July if inflation remains contained.
The Federal Open Market Committee voted last week to keep its benchmark rate steady at 4.25% to 4.5%, citing uncertainty from ongoing tariff policies. But with inflation cooling and economic risks mounting, investors are increasingly betting on a rate cut this summer.
In oil markets, Brent crude plunged 7.2% to $71.48 per barrel, easing concerns of a broader supply disruption in global oil markets.
West Texas Intermediate (WTI) crude dropped $5.33, or 7.2%, to $68.51. The broader energy market also saw declines.
Natural gas fell 4.13%, RBOB gasoline dropped 4.68% and ultra-low sulfur diesel declined 6.86%. Traders appeared to interpret Iran’s response as restrained, leading to a relief-driven sell-off in oil futures on expectations that further escalation — and major supply disruptions—may be avoided.
Cryptocurrencies surged Monday afternoon amid a broader market rally.
Bitcoin jumped 3.93% to $102,986.06, gaining nearly $3,900 on the day, while Ether rose 5.12% to $2,296.36.
Solana led major altcoins with a 7.48% surge to $138.66, followed by Dogecoin, up 6.44% at $0.1573, and XRP, which gained 4.59% to $2.05.
Earlier on Monday, traders who continued to monitor tensions in the Middle East following the US B-2 bomber assault on Iran’s nuclear facilities, including Fordow, Natanz and Isfahan, largely shrugged off the brouhaha.
Following the airstrikes, Tehran’s parliament has backed a resolution to potentially shut the Strait of Hormuz, one of the world’s most vital energy arteries.
While the move requires final approval from Iran’s Supreme National Security Council, the symbolic step has rattled global markets and sparked international concern.
“With Saturday night’s US B-2 bombing of key Iranian nuclear facilities including Fordow, Natanz, and Isfahan the key question hearing from investors over the weekend is what does this mean for the markets looking at trading today and this week,” wrote Dan Ives, managing director at Wedbush Securities.
“Our initial take speaking with tech investors around the globe over the weekend….it was viewed this US strike was a matter of when, not if the US was going to do this B-2 attack and in turn this ultimately removes an overhang on the market in our view after this successful strike.”
Ives said he expects tech stocks to remain resilient and sees cybersecurity companies as a bright spot in the short term.
“We believe tech stocks should shake this Iran jitters off with cyber security stocks in particular set to be front and center this week as investors anticipate some cyber attacks from Iran could be on the horizon as retaliation.”
Ives said the broader market is likely to view the Iran threat as receding after the strike.
“Furthermore a weakened Iran with no nuclear capacity removes the biggest threat to the Middle East and Israel which will be viewed as a positive for the market and tech stocks in particular as investors digest this news,” he wrote.
Ives added that investors are optimistic about the region’s longer-term economic and tech potential.
“With a weakened Iran and no nuclear capabilities, there is a growing view from tech investors that the opportunity for the Middle East to embrace the tech and AI boom is now on the doorstep being led by Saudi and UAE,” Ives wrote.
He acknowledged that volatility may persist in the near term, but called it a buying opportunity.
“There could naturally be some more volatility and headline risk this week….but we would encourage investors to buy our tech winners and AI Revolution stalwarts such as Nvidia, Palantir, Microsoft, Amazon, Oracle, Tesla on any weakness from geopolitical headlines,” Ives wrote.
“On the cyber security sector, our favorite names remain Palo Alto, Cyberark, Crowdstrike, Zscaler and Checkpoint.”
