Dow Jones Eyes Breakout as War Fears Fade, Fed Lends Support

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As traders dismissed weekend tensions in the Middle East, US stocks swung higher on Monday, with the Dow Jones testing resistance, supported by dovish Fed comments and waning geopolitical concerns.

Market Holds Ground Amid Geopolitical Swirl

The major US indices ended Monday near session highs, showing resilience despite initial jitters over the US’s involvement in the Iran-Israel conflict. Markets took comfort in signs that both sides may be seeking de-escalation, with no immediate signs of a full-scale ground war.

Early in the session, a pullback in US yields and speculation that Iran may enter negotiations following targeted US strikes helped underpin risk appetite. President Donald Trump’s remark thanking Iran for an “early warning” on its retaliatory strikes signaled that the worst may be over, at least for now. Crucially, Iran also held off on closing the Strait of Hormuz, a critical artery for global oil trade — a move that would’ve sparked panic across markets.

Fed Comments Add Fuel to the Rally

Adding to the positive sentiment, Fed Governor Bowman reinforced Governor Waller’s dovish stance from Friday, noting that a July rate cut could be warranted if inflation data cooperates. This helped drive the probability of a September rate cut to over 80%, with July odds creeping up to 23%.

Following Iran’s limited missile strike on a US base in Qatar — which caused no reported damage — risk appetite firmed further, lifting equities into the close.

Wall Street Kicks Off the Week Strong Amid Cooling Geopolitical Fears

• The Dow Jones Industrial Average closed higher by 374.96 points, or +0.89%, at 42,581.78, recovering after recent consolidation near key technical levels.
• The S&P 500 advanced 57.33 points, or +0.96%, to end the session at 6,025.17, supported by gains in tech, industrials, and financials.
• The NASDAQ Composite gained 183.56 points, or +0.94%, closing at 19,630.97, driven by a rebound in large-cap tech stocks and continued strength in AI-linked names.

Technical Picture Strengthens

The Dow Jones Industrial Average (DJIA) rose 374.96 points or +0.89% to close at 42,581.78, finding solid footing at the 50-week SMA (yellow). Bulls are now eyeing a potential breakout above the 20-week SMA (gray), with momentum building if geopolitical risk stays contained.

The S&P 500 recaptured key short-term levels, closing above its 100-hour moving average at 6,000.02, after bouncing from the 200-hour SMA earlier in the session. The NASDAQ Composite finished at 19,550.29, also holding above its 100-hour moving average, which keeps the near-term uptrend intact.

Outlook: With technical setups stabilizing and safe-haven bids unwinding, markets may now shift focus to upcoming inflation data and Powell’s next public comments. For now, the path of least resistance appears upward — barring a sudden geopolitical escalation.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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