The S&P 500 advanced on Monday as investors grew optimistic that a potential agreement between the U.S. and Iran could eventually be reached.
The benchmark index climbed 1.02% to close at 6,886.24, marking its highest level since before the conflict began. The Nasdaq Composite rose 1.23% to 23,183.74, while the Dow Jones Industrial Average gained 301.68 points (0.63%), finishing at 48,218.25. Earlier in the session, the Dow had dropped more than 400 points, with the S&P 500 and Nasdaq also trading in negative territory before staging a strong rebound.
Technology stocks led the rally, with companies like Oracle surging nearly 13% and Palantir Technologies rising over 3%. Their gains helped the broader market fully recover losses linked to the Iran conflict.
Markets moved higher after President Donald Trump signaled possible progress in negotiations, stating that the opposing side is eager to reach a deal.
This comes after heightened tensions, including the U.S. announcing a blockade of the Strait of Hormuz following unsuccessful weekend talks. While maritime restrictions targeting Iran took effect Monday, U.S. officials clarified that vessels heading to non-Iranian ports would not be affected.
The failed negotiations, which took place in Islamabad, renewed concerns about a prolonged conflict that could push oil prices higher and strain global economies. West Texas Intermediate (WTI) crude rose 2.6% to $99.08 per barrel, while Brent crude gained 4.37% to settle at $99.36 per barrel.
Vice President JD Vance departed the talks without an agreement, citing Iran’s stance on nuclear development as a key obstacle. Meanwhile, Iran’s demands reportedly include control over the Strait of Hormuz, war reparations, and access to frozen assets.
Diplomatic efforts are ongoing, with mediators from Pakistan, Egypt, and Turkey continuing discussions in the coming days. At the same time, reports suggest the U.S. is considering further military action if negotiations fail.
Despite the tensions, optimism around a potential resolution helped U.S. markets record their strongest weekly performance since November. Last week, the S&P 500 gained 3.6%, the Nasdaq rose 4.7%, and the Dow added 3%.
Adding to the positive outlook, BlackRock has upgraded its view on U.S. equities, citing manageable macroeconomic risks from the conflict and resilient corporate earnings as supportive factors for continued market strength.
