The Dow Jones Industrial Average closed up 0.6%, while the S&P 500 rose over 1%. The Nasdaq Composite outperformed, jumping more than 1.2%, driven by a sharp rebound in tech.
Stocks reversed course through the session after President Donald Trump signalled that Iranian leadership had reached out to his administration earlier in the day to “work out a deal”.
Also read: Wall Street opens lower amid looming Hormuz tensions; earnings hopes cushion losses
The development came shortly after Trump threatened to destroy Iranian ships attempting to disrupt a US-led blockade in the Strait of Hormuz, marking a sharp escalation before signs of de-escalation emerged.
Oil prices, which had surged earlier on supply concerns, also cooled off. Brent crude pared gains to rise about 2% and hover below $100 per barrel, while WTI held near $99, easing some immediate inflation concerns.
The S&P 500 briefly turned positive for the year in Monday’s session, marking a sharp turnaround from earlier losses driven by geopolitical tensions. The index rose about 0.5% on the day, nudging it marginally into the green for 2026 after being down more than 7% at the height of the US-Iran war.
Tech rebound and earnings optimism anchor sentiment
A key driver of the late-session rally was a strong comeback in software stocks.
The iShares Expanded Tech-Software ETF saw its best day in nearly a year, with heavyweights like Microsoft, Oracle, Palantir, Salesforce and Palo Alto Networks leading the charge. The move signals a bullish reversal after last week’s breakdown, offering support to the broader tech trade.
Stepping back, the market continues to show resilience despite repeated shocks. US oil prices have surged over 70% in the past year, while inflation remains above 3%, yet equities have reacted only modestly.
Also read: Jittery premarket: Dow slides over 500 pts as US-Iran talks collapse, Hormuz blockade looms
Even after the late-February escalation, the Nasdaq is still trading above pre-war levels, with the S&P 500 close behind. Last week’s ceasefire further reinforced sentiment, with the S&P 500 rising 3.6%, the Nasdaq gaining 4.7%, and the Dow adding 3%.
That underlying strength is also tied to earnings optimism. Consensus estimates peg first-quarter earnings growth at 13.9% year-on-year, with forecasts of 20%–22% for the remaining quarters, potentially marking the strongest annual expansion since 2018, excluding the pandemic rebound.
The trend underscores how markets have absorbed geopolitical volatility, supported by expectations of strong corporate performance and AI-led growth.
Focus now shifts firmly to earnings. Goldman Sachs has already kicked off the season, with JPMorgan Chase, Citigroup, Wells Fargo, Morgan Stanley and Bank of America lined up through the week.
