Wall Street Rises Following Iran’s Measured Retaliation and Fed Rate Cut Hints

Quick overview

Oil prices reversed early gains and closed lower on Monday after China expressed disapproval of any disruption in the Strait of Hormuz. This came amid a broader sense of calm across global markets, despite persistent demand for safe-haven assets.

U.S. stocks rose in a volatile session, as investors reacted positively to Iran’s measured response to U.S. airstrikes on three nuclear sites over the weekend. The restrained counterattack, combined with dovish comments on interest rates from Federal Reserve Governor Michelle Bowman, helped boost risk appetite.

The main indexes in New York all posted gains as initial jitters over President Donald Trump’s decision to support Israeli military action against Iran began to fade. The Dow Jones Industrial Average rose 0.9% to 42,581.78 points; the S&P 500 gained 0.9% to 6,023.73 points; and the Nasdaq Composite climbed 0.9% to 19,630.97 points.

Markets responded with relative composure, viewing the U.S. strikes on Iran as a limited escalation rather than the beginning of a broader war. The moderation in flows toward safe-haven assets suggests investors still see the conflict as contained and not yet a threat to global oil supply or trade routes.

Europe Ends Mixed as Oil Geopolitics Linger

In Europe, the pan-European STOXX 600 index closed down 0.3% after hitting its lowest level in over a month earlier in the session. Other major markets also finished in negative territory: Germany lost 0.3%, France declined 0.7%, the U.K.’s FTSE dropped 0.2%, while Spain ended flat.

Middle East Conflict: Still Contained—For Now

While Tehran did fire missiles at a U.S. airbase in Qatar on Monday, reports indicate that the attack was coordinated with Qatari officials in advance to minimize casualties. Qatar reported no fatalities. Other U.S. bases in the region remain on high alert.

Meanwhile, the Strait of Hormuz—one of the world’s most critical oil and gas chokepoints—remains under scrutiny. Iran had threatened to block the route but has not acted on that threat. China has publicly opposed any such move, and for now, the vital waterway remains open.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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