Markets Rebound, Oil Prices Fall After Iran-Israel Conflict Shock/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks rose Monday following Friday’s conflict-driven drop, while oil prices and gold declined. Market optimism reflects hope the Israel-Iran conflict won’t escalate. Investors also await Fed decisions and watch Trump’s tariff threats ahead of G7 trade talks.
Wall Street Rebounds as Oil Prices Fall: Quick Looks
- S&P 500, Dow, and Nasdaq all opened higher Monday.
- Oil prices fell after Friday’s 7% jump over Iran-Israel conflict.
- Benchmark U.S. crude dropped 1.6% to $71.82; Brent fell 1.7%.
- Gold prices slipped 0.5% after Friday’s surge on safe-haven demand.
- Investors cautiously optimistic conflict won’t disrupt global oil flow.
- U.S. tariffs under Trump still pose economic and inflation risks.
- Federal Reserve rate decision expected Wednesday amid mixed inflation signs.
- 10-year Treasury yield rose to 4.43%; 2-year held at 3.96%.
- Asian and European stock markets also saw modest gains.
- Chinese retail data upbeat, but factory growth lags behind.
Markets Rebound, Oil Prices Fall After Iran-Israel Conflict Shock
Deep Look
Wall Street regained its footing Monday morning as investor jitters began to subside following last week’s spike in geopolitical tensions. U.S. markets opened higher, buoyed by falling oil prices and hopes that the Israel-Iran conflict won’t result in broader regional disruption—especially one that could choke global energy supplies.
U.S. Markets Bounce Back
The S&P 500 rose 0.7% in early trading, on track to recapture over half its losses from Friday. The Dow Jones Industrial Average climbed by 280 points, also 0.7%, while the tech-heavy Nasdaq outpaced them both with a 0.9% rise. Global optimism followed, with markets from Asia to Europe seeing gains.
The initial selloff was triggered by Israel’s airstrikes on Iranian military and nuclear targets, a move that raised fears of a wider conflict that might impact oil shipments, especially through the Strait of Hormuz—a critical global energy chokepoint. Yet past flare-ups in the region have shown that oil supply often continues unaffected.
Oil Prices Retreat After Friday’s Surge
Reflecting this tempered concern, U.S. benchmark crude oil dropped 1.6% to $71.82 per barrel, and international Brent crude slid 1.7% to $72.97. This reversed some of Friday’s dramatic 7% spike, which had come in response to the Israeli attacks. Analysts are now betting that the worst-case scenario of supply disruption may be avoided.
Gold prices, another traditional safe haven during geopolitical crises, also retreated. An ounce of gold fell 0.5% to $3,433.90 after a steep climb on Friday when investors sought shelter from potential market turmoil.
Tariffs and the Fed Loom Over Wall Street
Beyond geopolitics, traders remain fixated on President Donald Trump’s tariff threats. If trade deals aren’t struck soon, Trump’s taxes on foreign imports could spike inflation and slow economic growth, making trade talks at the current G7 summit in Canada especially critical.
The uncertainty around trade policy is compounded by the Federal Reserve’s upcoming decision on interest rates, due Wednesday. While inflation remains near the Fed’s 2% target, recent tariff volatility may impact its policy direction. Though the Fed cut rates late last year, it has since paused further moves as it evaluates the economic fallout of Trump’s trade agenda.
Lower interest rates typically stimulate borrowing and growth but can worsen inflation if not managed carefully. The Fed’s hesitancy reflects that delicate balance.
Bond Market Reflects Cautious Optimism
Yields in the bond market offered subtle signals about investor expectations. The yield on the 10-year Treasury note ticked up to 4.43% from 4.41% on Friday, while the more policy-sensitive 2-year yield held steady at 3.96%. Rising yields usually suggest a positive economic outlook, albeit a tentative one in this case.
Global Markets Join the Recovery
Stocks also climbed across the globe. In Asia, Hong Kong’s Hang Seng gained 0.7%, while Shanghai’s index rose 0.3%. South Korea’s Kospi surged 1.8%, and Japan’s Nikkei 225 advanced 1.3%, posting some of the day’s strongest international performances.
Chinese economic data painted a mixed picture: consumer spending strengthened in May, but industrial production and infrastructure investment showed signs of slowing. These figures signal a somewhat uneven post-COVID recovery, yet investors welcomed any signs of resilience from the world’s second-largest economy.
In Europe, indexes posted moderate gains amid cautious optimism over the easing of global tensions and the hope that diplomatic solutions might prevail in the Middle East.
What to Watch This Week
As the week unfolds, investors are keeping a close eye on multiple fronts: the outcome of G7 trade negotiations, Trump’s tariff rhetoric, and the Federal Reserve’s policy decision on Wednesday. Together, these developments could shape the market’s next major move.
While Monday’s rally offers relief, the underlying concerns—global conflict, trade instability, and monetary policy—remain potent threats to sustained recovery.
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