US stocks opened higher on Monday, after President Donald Trump signaled a potential de-escalation in tensions with Iran by postponing planned military strikes on key energy infrastructure.
The Dow Jones Industrial Average index jumped as much as 653 points, or 1.4%, while S&P 500 rose 1.3% and Nasdaq-100 gained 1.5%.
The rebound came after a period of sustained weakness, with major indexes logging multiple weeks of losses amid escalating geopolitical tensions and surging oil prices.
Markets rebound on hopes of de-escalation
Investor sentiment improved sharply after Trump said the US had engaged in “productive conversations” with Iran and that he had ordered a five-day pause on strikes targeting Iranian power plants and energy infrastructure.
“I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East,” Trump wrote in a Truth Social post.
“Based on the tenor and tone of these in depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions,” he added.
However, the optimism was tempered after Iran’s Fars News Agency disputed the claim, saying there had been no direct or indirect communication with the United States.
Meanwhile, Israel’s military said it continued to conduct strikes on Iran.
Oil tumbles, risk appetite returns
Global markets reacted swiftly to Trump’s comments, with equities rebounding and oil prices falling sharply, indicating a shift toward risk-on sentiment.
Crude prices dropped significantly, with West Texas Intermediate futures falling more than 7% to around $91 per barrel, while Brent crude declined over 6% to about $99 per barrel.
Earlier, oil prices had surged amid fears of supply disruptions, particularly around the Strait of Hormuz, a critical route for global energy shipments.
Airline stocks, which are sensitive to fuel costs, rallied strongly, with American Airlines and United Airlines rising more than 4% each.
Banks also edged higher, with JPMorgan Chase and Goldman Sachs gaining around between 1.6% to 2%.
In contrast, energy stocks declined as oil prices retreated. Exxon Mobil and Chevron both slipped over 1%, while Occidental Petroleum fell 2%.
Volatility eases but uncertainty persists
The rebound followed weeks of heightened volatility.
Wall Street’s main indexes had recorded their fourth consecutive week of declines on Friday, with the Nasdaq posting its biggest weekly drop since early February.
Both the Dow and Nasdaq were nearing correction territory, down roughly 9.8% from their record highs, while the S&P 500 had fallen about 7%.
The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, pulled back after earlier touching a two-week high, though it remained elevated.
Investors also adjusted their expectations for US monetary policy, trimming bets on further interest rate hikes following the easing in geopolitical risk.
Still, analysts cautioned that the durability of the rally would depend on further confirmation of de-escalation.
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