By Jared Mitovich

The U.S. blockade of the Strait of Hormuz is the latest Middle East development to test investors' tolerance for pain. They are wincing less each time.

A surge in software stocks helped indexes open the week with gains Monday despite disturbing Iran-related news from the weekend, including the collapse of peace negotiations in Pakistan. The reports briefly lifted oil prices back above $100 a barrel, but couldn't hold the S&P 500 from notching a 1% gain to extend its winning streak to eight sessions and log its highest close since before the start of the Iran conflict.

Some observers saw the gains as a sign that investors are now parsing corporate earnings -- even as the situation on the strait turns more turbulent.

"We'll continue to pay attention to it, but try not to get too optimistic or pessimistic based on the latest headline," said Tim Holland, the chief investment officer at Orion.

The S&P 500 is now up 0.6% so far this year. The Dow Jones Industrial Average gained 301 points on Monday, or 0.6%, and into positive territory for the year.

The Nasdaq Composite Index rose 280 points, or 1.2% -- solidifying its largest nine-day point gain on record and its longest winning streak since 2023.

Tech stocks led gains in the S&P 500, with the information-technology sector rising around 1% to its highest value since the war with Iran began at the end of February. Software stocks have been hit hard by worries that artificial-intelligence tools will disrupt the industry, but they have rebounded lately as investors have learned to differentiate between the winners and losers of the AI age, said Scott Ladner, chief investment officer at Horizon Investments.

"Now we're getting to a place where analysts have had time to look at the individual software companies and say, 'I like this one, I don't like that one," Ladner said.

Some of Monday's winners: Oracle, which rose over 12% and was the top-performing stock in the S&P 500; Service Now, which climbed more than 7%, and Adobe, which recorded its largest percent increase in a year. The iShares Expanded Tech-Software Sector ETF added around 5.4%.

Investors also got the first taste of a busy week of bank earnings -- and it was a bit sour. Shares in Goldman Sachs declined around 1.9%, dragging on the Dow industrials, despite the firm reporting better-than-expected profit for the first quarter Monday morning. While overall revenue topped expectations, some of the bank's businesses underperformed in early 2026, Oppenheimer analyst Chris Kotowski noted.

As earnings season ramps up, traders hope it reflects the tailwinds that were boosting the economy before the Middle East conflict erupted.

"There's a recognition that this is a hassle, this is suboptimal, we don't want the war," Ladner said. "But it's not enough to derail everything -- barring something cataclysmic like a nuke."

Oil moved once again on the weekend's developments in the Middle East. Brent crude, the international oil benchmark, added 4.37% to close at $99.36 a barrel. The price of physical crude oil cargoes for prompt delivery to Europe hit another record high of nearly $150 a barrel, though futures indicated that traders were less concerned about supply stress persisting late into the year.

The blockade on ships entering or exiting Iranian ports, which began Monday morning, will choke off the flow of roughly two million barrels a day of crude that Tehran has been exporting throughout the conflict, and it heightens uncertainty for ships trying to cross the Strait of Hormuz.

Markets' muted reaction to the development reflects an investor class that has de-risked for the short-term and is now considering the long-term outcomes of the conflict -- where diplomacy still seems possible, Holland said.

He said he was cautiously optimistic that U.S. presence on the Strait of Hormuz, through which 25% of global energy supply typically travels, was better than the feared alternative of an Iran-governed waterway.

Write to Jared Mitovich at jared.mitovich@wsj.com

(END) Dow Jones Newswires

April 13, 2026 16:51 ET (20:51 GMT)

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