Dow Jones: US Stocks Jump on Crude Oil News and Hopes of Limited Middle East Conflict

Dow Surges 400 Points as Oil Prices Fall on Signs of Cooling Tensions in Middle East

U.S. stocks bounced back on Monday, with the Dow Jones Industrial Average climbing more than 400 points. Investors were encouraged by signs that the conflict between Israel and Iran might not grow into a larger regional war. That helped ease concerns in the oil market, where prices dropped after a sharp spike late last week.

Oil had jumped more than 7% on Friday after Israel struck Iran. But on Monday, crude prices fell over 3%, with U.S. benchmark West Texas Intermediate settling around $69.38 per barrel. The pullback came as reports suggested Iran may be open to stopping the fighting—if the U.S. stays out and talks about the nuclear deal resume.

Are Oil and Energy Prices Still a Big Concern?

Even though airstrikes continued into Monday, investors were relieved to hear Iran may want a ceasefire. Reports said Tehran is working with Saudi Arabia and others to send messages urging Israel to pull back. Iran also hinted it might rejoin nuclear talks, a move that could calm tensions further.

Still, risks remain. Iran threatened to shut down the Strait of Hormuz—a key oil shipping route—and Israel said it had gained control of Iran’s airspace. Any disruption there could cause another oil price spike and hurt global supply.

What’s Driving the Stock Market Rebound?

Falling oil prices gave investors more confidence to get back into stocks, especially tech companies. Tesla rose over 1%, Meta gained 3%, and Palantir jumped more than 4%, partly on hopes it could benefit from defense-related spending.

The Dow recovered most of Friday’s losses, and the S&P 500 and Nasdaq also moved higher. Last week’s dip was driven by fears that a wider war could hurt the economy. Monday’s rally suggested many investors now see those fears as overdone—for now.

What’s Next from the Federal Reserve?

Investors are also watching the Federal Reserve closely. A decision on interest rates is due Wednesday. Weaker-than-expected manufacturing data released Monday supports the case for no change in rates. According to futures markets, the Fed is widely expected to hold steady.

President Trump has pushed for rate cuts, but rising oil prices from the Middle East tensions may give the Fed another reason to stay cautious.

What Should Investors Watch Now?

For now, Wall Street is betting the conflict will remain limited. But any new military action or supply disruption could bring more volatility. Investors should keep an eye on oil prices, headlines out of the Middle East, and the Fed’s comments this week for clues on where markets could head next.

More Information in our Economic Calendar.