U.S. markets surged Monday as a major Wall Street rally helped stocks recover from last week’s geopolitical shock. Investor anxiety over the escalating conflict between Israel and Iran eased, prompting rebounds across the Dow Jones, Nasdaq, and S&P 500, while oil and gold prices slid from Friday’s highs.
Wall Street Rally Gains Momentum
At the open, the S&P 500 rose by 1.1%, reclaiming nearly all of Friday’s losses. The Dow Jones Industrial Average climbed 449 points (1.1%) and the Nasdaq Composite soared 1.4%, leading a Wall Street rally that was mirrored globally. Asian and European markets also posted gains, reflecting optimism that the latest Middle East tensions may remain contained.
While Israel and Iran continue exchanging hostilities, fears of a broader war disrupting oil supplies have slightly diminished. Historically, even direct conflicts in the region have resulted in only short-term spikes in crude prices.
Oil Prices Ease on Iran’s Diplomatic Signals
On Monday, benchmark U.S. crude oil fell 3.3% to $70.59 per barrel. That followed a sharp 7% jump on Friday after Israeli strikes on Iranian targets. Prices reversed course after The Wall Street Journal reported Iran may seek to de-escalate and resume nuclear talks, easing concerns over potential oil supply disruptions through the Strait of Hormuz.
Gold, another traditional haven, also pulled back. After surging on Friday, it dropped 1.1% to $3,413.40 per ounce, indicating that investors are less urgently seeking shelter from risk.
Wall Street Rally Faces Political and Economic Headwinds
Despite the rally, several unresolved issues continue to cloud market sentiment. President Donald Trump’s tariffs remain a major concern. The U.S. is participating in a G7 meeting in Canada, where the trade agenda—particularly protectionist policies—could strain global cooperation. If not resolved, Trump’s tariffs may stoke inflation and weaken U.S. growth.
This uncertainty plays into another key focus this week: the Federal Reserve’s interest rate decision, expected Wednesday. The Fed has held rates steady so far in 2025, monitoring the impact of tariffs and inflation. Current inflation remains near the central bank’s 2% target, offering room for flexibility.
Lower interest rates can stimulate growth but risk increasing inflation. As of Monday, the 10-year Treasury yield held steady at 4.41%, while the 2-year yield—which better reflects rate expectations—edged down to 3.94%.
Merger News and Steel Sector Surge Boost Wall Street Rally
Several corporate developments also contributed to Monday’s Wall Street rally. Shares of Sage Therapeutics (NASDAQ:SAGE) soared 35.3% after Supernus Pharmaceuticals (NASDAQ:SUPN) announced a deal to acquire the biotech company for up to $795 million, or $12 per share, contingent on performance milestones.
Meanwhile, U.S. Steel (NYSE:X) jumped 5.1% following an executive order signed by Trump approving an investment from Nippon Steel, a Japanese conglomerate. Under the agreement, the U.S. government would retain influence over the company’s domestic operations.
Conversely, defense stocks retreated after Friday’s gains. Lockheed Martin (NYSE:LMT) and Northrop Grumman (NYSE:NOC) slipped 1.8% and 1.3% respectively, as immediate fears of extended conflict subsided.
Wall Street Rally Extends Globally
Global markets participated in the rally. In Asia, Japan’s Nikkei 225 gained 1.3%, South Korea’s Kospi climbed 1.8%, and Hong Kong’s Hang Seng rose 0.7%. China’s Shanghai Composite added 0.3%, buoyed by strong consumer spending data despite slowing factory and infrastructure growth.
European indexes also posted modest increases, following Wall Street’s lead and reflecting renewed confidence among global investors.
Conclusion: Rally Offers Hope Amid Uncertainty
Monday’s Wall Street rally highlights the market’s resilience even as geopolitical and economic pressures loom. With oil prices easing, merger activity heating up, and the Fed on deck, investors appear cautiously optimistic. But the path forward remains volatile—hinging on diplomacy, trade negotiations, and central bank strategy.
As always, market watchers will be monitoring developments closely to see whether this rally has staying power or is simply a temporary relief from ongoing global stressors.
Featured Image – Freepik
