U.S. stocks rebounded to close higher on Monday, driven by comments from President Donald Trump suggesting the war with Iran may be nearing its end, and that he is considering taking control of the Strait of Hormuz. These remarks helped major indices recover from earlier losses. Gains in semiconductor stocks also provided a boost to the broader market.
The Dow Jones Industrial Average rose 239.25 points, or 0.50%, to close at 47,740.80. The Nasdaq Composite climbed 308.27 points, or 1.38%, to 22,695.95. The S&P 500 gained 55.97 points, or 0.83%, finishing at 6,795.99. All three major U.S. stock indices staged a sharp reversal from their Monday morning declines. The Dow had been down nearly 900 points earlier in the session, while the S&P 500 and Nasdaq had each fallen as much as 1.5%.
On Monday, Trump told a reporter, who shared the comments on platform X, that the war is "very complete, pretty much over." He stated, "They have no navy, no communications, no air force," adding that the U.S. is far ahead of his initial four-to-five-week war timeline. Trump also mentioned that ships are now moving through the Strait of Hormuz and that he is "thinking about taking it over."
U.S. West Texas Intermediate crude fell 9% to $81 per barrel. In overnight trading, the price had surpassed $100 per barrel, briefly exceeding $119, marking the first time it breached the $100 level since investors reacted to the aftermath of the Russia-Ukraine conflict in 2022. The international benchmark Brent crude retreated 8% to $84 per barrel. U.S. oil prices started the year below $60 per barrel.
The rise in semiconductor stocks further supported the market. Broadcom advanced more than 3%, while Micron Technology and Advanced Micro Devices each gained about 2%. NVIDIA rose nearly 1%.
Oil prices had surged due to production cuts by major Middle Eastern oil producers following the closure of the critical Strait of Hormuz. Kuwait announced a production cut but did not specify the magnitude, while Iraq's output was reportedly down 70%.
Energy ministers from the G7 nations—Canada, France, Germany, Italy, Japan, the UK, and the U.S.—are scheduled to hold a virtual meeting Tuesday morning to discuss a potential release of oil reserves. The group's finance ministers met Monday to discuss a release but made no decision.
Many on Wall Street view $100-per-barrel oil as a tipping point for the economy unless the war is resolved quickly and prices retreat. In a post on Sunday night, Trump called a "short-term oil price increase" a "very small price to pay" to destroy Iran's nuclear threat.
Ed Yardeni, President and Chief Investment Strategist at Yardeni Research, wrote, "If investors begin to anticipate a replay of 1970s-style stagflation, we cannot rule out a bear market. If the oil shock persists, the Fed's dual mandate will be caught between rising inflation and increasing unemployment risks."
John Luke Tyner of Aptus Capital Advisors noted that despite the initial oil price spike Monday, the energy sector showed little movement during the trading session—suggesting investors may still be hopeful for a favorable outcome to the war. The portfolio manager and head of fixed income said, "The market is still pricing in, to some extent, that this will be fairly short-lived." However, if the Energy Select Sector SPDR Fund (XLE) were to quickly surge 10% or 15%, it would signal the market is pricing in an expectation that the war "will last a long time, with a lot of oil supply either trapped or destroyed." Tyner added that if the war does last longer than expected, a drop in the S&P 500 to around 6,200 is not "impossible."