Stocks climbed Monday even as geopolitical tensions escalated, with the U.S. launching airstrikes on three Iranian nuclear sites over the weekend in support of Israel. Despite the developments, oil prices eased, helping lift investor sentiment.
The Dow Jones Industrial Average rose by 90 points (0.2%), the S&P 500 gained 0.3%, and the Nasdaq Composite edged up 0.1%.
The U.S. airstrikes hit facilities in Fordo, Isfahan, and Natanz, surprising markets that had anticipated a more measured response following President Trump’s remarks Friday that a decision on Iran would come “within the next two weeks.”
Oil prices, which had surged in recent weeks amid rising Middle East tensions, initially spiked Sunday night but later pulled back. WTI crude ended Monday down 0.5% at $73.65 per barrel after volatile trading.
In a Saturday address, Trump warned Iran that “there will be either peace, or tragedy far greater than we’ve seen over the last eight days.” Markets are now watching closely for Tehran’s response, with concerns Iran could retaliate by targeting U.S. forces or disrupting oil shipments through the Strait of Hormuz, a critical global trade route. A prolonged closure could push crude prices above $100 per barrel.
U.S. Secretary of State Marco Rubio urged China, Iran’s top oil buyer, to pressure Tehran to keep the strait open.
Despite the heightened risks, some analysts remained calm. “Investors aren’t panicking over an oil shock just yet,” wrote Adam Crisafulli of Vital Knowledge, citing Iran’s weakened military position, limited international support, and ample global oil supply.
Still, the potential for a broader Middle East conflict adds to the challenges facing markets already strained by President Trump’s aggressive reshaping of global trade policy.
“Even with the current turmoil—tariffs and now war—the U.S. economy continues to show resilience,” wrote Ed Yardeni, president of Yardeni Research, pointing to its performance through prior crises like Russia’s invasion of Ukraine and Federal Reserve rate hikes.