US stock markets surged on Monday as oil prices pulled back, giving investors some relief after last week’s sharp rise in crude. Last week, Brent crude oil crossed $100 per barrel for the first time since 2022. Prices surged as traffic through the Strait of Hormuz, one of the world’s most important oil shipping routes was largely halted due to the ongoing war.
However, oil prices began to decline on Monday after US Treasury Secretary Scott Bessent said the United States is allowing Iranian oil tankers to pass through the Strait of Hormuz. At 9 am EDT, the Dow Jones Industrial Average rose 320 points, or 0.7%. The S&P 500 gained 1.22%, while the Nasdaq Composite climbed 1.3%. A Wall Street Journal report also said the US will soon announce a coalition of countries that will escort ships through the strait, helping restore safe passage for oil shipments.
Major indices move higher
Regardless of the tensions in the Middle East, the stock market has remained relatively stable. S&P 500 is still only about 5% below the all-time high it reached earlier this year. President Donald Trump ordered strikes on Iranian military assets on Kharg Island on Friday.
The attack did not target oil infrastructure, but Trump warned that the US could consider hitting those facilities if Iran continues to block traffic through the Strait of Hormuz. Trump also told NBC over the weekend that Iran wants to negotiate, but said he is not ready to make a deal yet.
“The market thinks we do have the upper hand here in Iran and they’re going to come to a deal and it might be this week,” said Wharton’s Jeremy Siegel on CNBC’s “Squawk Box” Monday. “Of course, a lot of tail uncertainty here, but certainly … the market’s thinking something right now.”
Experts say energy stability could support markets
Analysts say that if oil prices stabilise and shipping through Hormuz resumes, markets could will shift focus back to economic fundamentals.
“Sable energy prices will be good for growth and stocks,” Laffer Tengler Investments CEO and CIO Nancy Tengler said in written commentary. “Historically, these ‘events’ have been short-lived. As soon as ships sail through the Hormuz we think oil prices will melt down, and investors’ attention will return to fundamentals.”
Technology stocks lift Wall Street futures
Wall Street futures also moved higher due to gains in technology stocks and fresh developments in artificial intelligence investment. Shares of several major technology companies rose in premarket trading after reports about restructuring and spending linked to AI infrastructure.
Investors are also watching upcoming technology events and earnings updates, especially from chip companies and AI-related projects. At the same time, market participants remain cautious because oil prices are still elevated due to tensions in the Middle East and disruptions in the Strait of Hormuz.
Meta, Nvidia and Micron shares rise
Meta shares rose about 2.6% in premarket trading after a report said the company plans to cut more than 20% of its workforce.
The company aims to offset rising artificial intelligence infrastructure costs and improve operations through AI-assisted systems. Similar job cuts have been announced earlier this year by Amazon and Block.
Other technology stocks also supported the market. Nvidia rose about 1.1% ahead of its developer conference, where investors expect announcements related to new artificial intelligence hardware and systems. Micron shares climbed about 4.4% after a brokerage increased its price target for the company.
Analysts still see risks from prolonged war
Some analysts say markets may not yet be fully considering the potential impact of a prolonged conflict.
“The apparent resilience in the S&P 500 is attributable to the increasing bullishness of industry analysts’ consensus estimates for earnings per share in 2026 and 2027,” wrote Ed Yardeni, president of Yardeni Research to Investopedia. “Apparently, they did not get the memo about the possible negative consequences of a protracted war and closure of the Strait.”
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.