U.S. Markets roared back Monday after President Donald Trump hit pause on planned strikes against Iran’s power grid. Oil prices took a sharp dive, reflecting hopes for a thaw in Middle East tensions that had pushed crude above $100 a barrel just days before.
Markets React to Trump’s Announcement
Stocks surged across the board after Trump said the U.S. Would delay military action on Iranian energy infrastructure for five days. The president described conversations with Iran as “very good and productive,” raising hopes for a diplomatic resolution to the conflict that had rattled global markets.
At the closing bell, the Dow Jones Industrial Average had climbed 631 points, the S&P 500 rose 1.1%, and the Nasdaq Composite gained 1.4%. The Russell 2000 index led with a 2.7% increase. It was the strongest day for these indexes since early February, with every sector in the S&P 500 finishing higher.
The initial reaction was even more dramatic. Futures for the S&P 500 and Nasdaq 100 jumped about 3% early Monday morning before settling back to still solid gains by market close.
Oil Prices Pull Back Sharply
Oil prices fell sharply as the news spread.
U.S. Crude dropped nearly 11%, settling at $88.13 a barrel, while Brent crude dipped below the $100 mark to $99.94—its first close under $100 since March 11.
The sudden reversal erased a chunk of the steep price increases that followed the escalation of hostilities in late February.
Still, crude remains more than 30% higher since the war began on February 28 and has surged over 50% since the start of the year. The Strait of Hormuz, a key global oil transit route, remains a flashpoint. Trump said the passage could reopen “very soon,” though analysts cautioned that even if fighting ends quickly, it would take months to fully restore flows.
Investor Caution and Market Volatility
Tuesday brought a more mixed picture. Wall Street’s major indexes opened lower amid uncertainty about the true state of U.S.-Iran talks. Tehran denied any formal negotiations, contradicting Trump’s claims of progress. The Dow managed a modest gain of 178 points, while the S&P 500 added 0.2%. The tech-heavy Nasdaq slipped 0.2%, weighed down by losses in technology and communication sectors.
“Investors are trying to wrap their heads around what’s going on and where the president is taking this war,” said Robert Pavlik, senior portfolio manager at Dakota Wealth. “There’s a lot of volatility. You could get hurt being long or short.”
Energy and financial stocks provided some lift, offsetting tech declines. Goldman Sachs and Caterpillar helped bolster the Dow, but broader uncertainty kept gains in check.
Broader Economic Implications
The Middle East conflict has stoked inflation fears by driving up energy prices, complicating the Federal Reserve’s outlook. Business activity in the U.S. Slowed to an 11-month low in March, as rising costs squeezed companies, according to a recent survey.
Last week, the Fed signaled a hawkish stance, projecting only one interest rate cut in 2026 and increasing the odds of hikes amid geopolitical risks. Money markets have since reversed expectations for rate reductions this year, reflecting the pressure from higher energy prices and uncertainty over the conflict.
Meanwhile, concerns about private credit funds surfaced again. Ares Management and Apollo Global Management limited redemptions at their private credit funds after a surge in withdrawal requests. This followed similar moves by BlackRock and Morgan Stanley earlier in the month. Blackstone and Carlyle Group shares dipped slightly amid the news.
The markets remain on edge as investors weigh conflicting signals from Washington and Tehran. Whether the recent talks mark the start of real de-escalation or just a pause in hostilities will shape market moves in the days ahead.
