Stocks rallied Monday after President Donald Trump said the U.S. and Iran have held talks and that he was halting strikes on Iranian power plants and energy infrastructure. The development gave investors hope that the Middle East conflict that spiked oil prices and raised fears of a global recession was nearing an end.
The Dow Jones Industrial Average jumped 631 points, or 1.38%, to close at 46,208.47. The S&P 500 rose 1.15%, and ended at 6,581.00, while the Nasdaq Composite gained 1.38% and settled at 21,946.76. Before Trump's comments, which he posted on Truth Social early Monday, futures were pointing to more losses for equity markets under siege from skyrocketing oil prices and uncertainty about the duration of the Iran conflict. But after Trump's comments, Dow futures briefly surged more than 1,000 points.
At their highs of the day, the three leading U.S. indexes were up more than 2%. The Dow saw a peak of more than 1,100 points, or 2.5%. The Nasdaq was also up 2.5%, while the S&P 500 advanced 2.2%.
Crude prices dropped after Trump's post, and West Texas Intermediate futures settled down 10.28% at $88.13 per barrel. International benchmark Brent fell 10.92% to close at $99.94 a barrel.
"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 his 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," the president wrote.
Later Monday morning, Trump said that both Iran and the U.S. wish to "make a deal" and that the two countries are "going to get together today by, probably, phone."
Stock futures were off their highest levels of the session after Iranian state media said there were no direct talks between the U.S. and Iran.
Trump's announcement came as the Iran war entered another week, with tensions escalating over the weekend on an ultimatum from the president. Trump had threatened an attack on Iranian power plants in 48 hours if the Strait of Hormuz — a key shipping route for oil and other energy products — wasn't reopened. Iran, in turn, said it would target U.S. infrastructure, including energy and desalination facilities in the Persian Gulf region, if the U.S. carried out its threat.
"The market's move today is more about the direction that they can tell the administration wants to go, but I would view getting something done this week that just brings things back to normal with a heavy dose of skepticism, given all the various complications," Ross Mayfield, Baird investment strategist, told CNBC.
"What does Israel want? What does Iran want? What do our allies in the Gulf want? Has there been structural damage to LNG and crude oil exporting and refining facilities that — even if we end this thing this week — structurally alter the price of oil and put more of a premium on it?" he said.
Before Monday's rebound, the Dow and Nasdaq Composite were each threatening to fall into correction territory — a 10% pullback — with both down around 9.8% from their record levels through Friday. The S&P 500 was off by 7% from its high before Monday's turnaround.
It was a broad rebound during the session, with cyclical shares such as banks and industrials surging as well as technology shares. JPMorgan Chase climbed more than 1%, while Morgan Stanley was nearly 2% higher. Caterpillar added 3%, while Deere climbed more than 1%. Nvidia and Apple were each higher by more than 1%. Airline stocks Delta Air Lines and United Airlines were up more than 2% and 4%, respectively, as oil prices slid.
The Dow and Nasdaq fell around 2% each last week, while the S&P 500 lost 1.5% as the Iran conflict continued to drag down markets. For the Dow, it was the first four-week losing streak since 2023.
"The market has been desperate for any good news, and this appears to be, at least on the surface, the best news we can expect," said Art Hogan, chief market strategist at B. Riley Wealth Management. "If we were able to see any downward pressure on energy prices, the market is like a coiled spring looking for a reason to move higher."
— CNBC's Fred Imbert contributed reporting.
