- U.S. stocks rose Monday despite escalating attacks between Israel and Iran. The Dow, S&P 500, and Nasdaq all ended higher after falling Friday. The price of crude oil also fell almost 2% after a report claimed Iran is looking to negotiate with Israel to end the conflict.
Despite several confrontations between Israel and Iran over the weekend and on Monday that have left hundreds of civilians dead, investors in the U.S. seemed to shrug off the escalating tensions in the Middle East as stocks rebounded to start the week.
In fact, after falling Friday, the Dow Jones industrial average closed 0.75% higher Monday, while the S&P 500 increased 0.94%, and the Nasdaq Composite rose 1.52%.
Jeff Buchbinder, chief equity strategist for LPL Financial, says the U.S. market is holding up well owing to a confluence of factors, including that both Iran and Israel have an “interest in keeping the conflict contained.”
“There are several key questions to answer before we know how stocks will handle this geopolitical shock, including how much of Iran’s energy infrastructure will be impaired and for how long, whether Iran’s nuclear capabilities will be completely wiped out, and whether the current regime will remain in power,” says Buchbinder.
Though U.S. crude oil surged Friday following Israel’s initial attack, it fell almost 2% Monday, after the Wall Street Journal reported that Iran wants to negotiate an end to the conflict with Israel. That said, the two countries continued to attack each other’s energy facilities Monday, and Israel struck the headquarters of Iran’s state television live on air.
The conflict in the Middle East is adding yet another layer of uncertainty to the economy, at a time when President Donald Trump’s tariff policies are causing concern, as are the White House’s immigration policies and the GOP tax bill.
Investors will also be watching the Federal Reserve meeting this week. Though officials have signaled a hold on interest rates is likely, all eyes will be on Chair Jerome Powell for information on when the central bank could move.
