U.S. markets rallied broadly Monday as falling oil prices and shifting rate expectations fueled a sharp rebound across major indexes.
By yourNEWS Media Newsroom
U.S. stock markets posted strong gains Monday, reversing losses from the previous week as oil prices dropped sharply after President Donald Trump announced a pause on planned military strikes against Iranian energy infrastructure following what he described as “productive conversations” with Tehran.
The rally came despite conflicting statements from Iranian officials. Iran’s Parliamentary Speaker Mohammad Baqer Qalibaf said publicly that no negotiations had taken place with Washington, contradicting Trump’s assertion that recent discussions had produced “major points of agreement” and could lead to a resolution of the conflict.
Markets, which had been under pressure amid escalating tensions tied to threats against energy infrastructure in Israel and Iran, shifted direction after Trump’s announcement eased immediate concerns over supply disruptions.
By the close of trading, all three major indexes had gained more than 1%. The Dow Jones Industrial Average rose 631.06 points, or 1.39%, finishing at 46,211.53. The S&P 500 advanced 73.77 points, or 1.13%, to 6,580.25, while the Nasdaq Composite climbed 300.94 points, or 1.39%, ending at 21,948.55.
Oil prices fell more than 10% on the day, providing relief to equities and contributing to gains across all 11 sectors of the S&P 500. Cyclical sectors, including consumer discretionary, led the advance, while defensive sectors such as healthcare and consumer staples saw more modest gains.
Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, said uncertainty remains over the conflicting messaging from Washington and Tehran, but noted that markets responded quickly to signs of potential de-escalation.
“You never know who to believe but it does appear that Trump is trying to start discussions with somebody in Iran to resolve the war despite strong denials from Iran,” Ghriskey said. “This has caused significant optimism in stock prices today with the market up strongly although off its highest levels because of the Iranian denials.”
The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, declined after earlier reaching a two-week high, reflecting reduced investor anxiety as oil prices retreated.
Bob Doll, chief investment officer at Crossmark Global Investments, said energy prices remain the primary driver of short-term market movement.
“The volatility is likely to continue and it’s all about the price of oil. Nothing else really matters to people in the short term,” Doll said. “So when oil prices are down, stocks go up and vice versa. What’s up the most today is not a surprise. It’s things with economic sensitivity.”
Rate expectations also shifted during the session. According to CME Group’s FedWatch tool, traders reduced the probability of a December interest-rate hike by the Federal Reserve to about 12%, down from 25% in the prior session. Markets now reflect a 70.8% likelihood that rates will remain unchanged through the end of the year after investors scaled back expectations for rate cuts following the Fed’s recent hawkish tone.
Smaller companies outperformed larger peers, with the Russell 2000 index leading gains after having entered correction territory last week, closing more than 10% below its January 22 record high.
Airline stocks rose alongside falling fuel costs, with Alaska Air, American Airlines, and United Airlines all posting gains. Cruise operators, including Norwegian Cruise Line, Carnival Corp, and Viking Holdings, also advanced significantly.
Financial stocks rebounded after earlier weakness tied to geopolitical concerns, with the S&P 500 banking index recording its largest single-day gain since before the conflict escalated.
In corporate developments, shares of Synopsys climbed after reports that activist investor Elliott Investment Management had taken a multibillion-dollar stake in the electronic design automation firm.
Investors are now turning their attention to upcoming Federal Reserve commentary, business activity data, and consumer sentiment reports expected later this week, which could provide further direction for markets navigating ongoing geopolitical and economic uncertainty.
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