Dow Jones Industrial Average surges as Trump halts Iran strikes, Oil plunges

Trump-Iran de-escalation triggers broad risk rally

The entire American market session was defined by a single Truth Social post: President Trump announced that the US and Iran had held "very good and productive conversations" over the weekend and that he had instructed what he called the Department of War to postpone all military strikes against Iranian power plants and energy infrastructure for five days. Prior to the post, futures had been pointing to another bruising session with Oil continuing to surge and equities under pressure.

Dow futures briefly jumped more than 1K points in the immediate aftermath. The rally cooled somewhat after Iranian state media denied that any direct talks had taken place between Washington and Tehran, pulling the major indices off their session highs. Still, the general read was that the administration's willingness to pause escalation was itself a meaningful signal, even if a comprehensive deal remains a long way off.

Oil craters on ceasefire hopes

The crude complex saw its most dramatic single-session reversal in weeks. West Texas Intermediate (WTI) futures tumbled roughly 8% to settle around $91 a barrel after hovering near $100 earlier in the day. International benchmark Brent plunged more than 7% to around $101, having touched above $114 during the Asian session before Trump's post. Even with Monday's selloff, both benchmarks remain more than a third above their pre-war levels from late February.

Goldman Sachs raised its near-term Oil price forecasts earlier in the day, expecting Brent to average above $100 through April, citing the ongoing effective closure of the Strait of Hormuz which normally handles around 20% of global seaborne Oil trade. The International Energy Agency (IEA) also signalled readiness for another emergency release from strategic stockpiles if needed.

Cyclical stocks lead the rebound

It was a textbook risk-on day. Caterpillar (CAT) led the Dow with a gain of roughly 4%, followed by 3M (MMM) and Home Depot (HD) each up more than 3%. Banks caught a bid as Treasury yields pulled back, with JPMorgan (JPM) and Morgan Stanley (MS) both climbing. Airline stocks were among the session's biggest beneficiaries of the Oil selloff, with Delta Air Lines (DAL) and United Airlines (UAL) rallying sharply. In the mega-cap tech space, Tesla (TSLA) gained around 3%, while Nvidia (NVDA), Amazon (AMZN), and Apple (AAPL) each rose more than 2%, getting some relief after mixed guidance on artificial intelligence demand from chipmakers weighed on the group last week.

Rate cut expectations continue to evaporate

The Federal Reserve (Fed) held rates steady at 3.50%-3.75% at last week's Federal Open Market Committee (FOMC) meeting, its second consecutive hold after three 25-basis-point cuts closed out 2025. The updated dot plot now projects just one cut for the remainder of 2026, down from previous forecasts, and the CME FedWatch Tool shows how quickly the market has repriced. The probability of rates remaining unchanged through June has surged to 89% from under 38% just a month ago, and there is now a slim chance of a rate hike for the first time.

For the full year, markets see it as more likely than not that the Fed does not cut at all. Gold, typically a beneficiary of geopolitical stress, has instead been crushed by the shift in rate expectations, falling below $4,300 on Monday to its lowest level of 2026 as higher-for-longer rates reduce the appeal of the non-yielding metal.

Dow Jones five-minute chart

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The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

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