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A cautious relief rally swept through financial markets Monday after President Donald Trump said the United States had talked with Iran about a possible end to their war. Stocks rose on Wall Street and oil prices eased after severe losses earlier, but traders held back on how far to push the move as Iran publicly denied the talks.
Trump said the United States and Iran held “productive talks the last two days ‘regarding a complete and total resolution of our hostilities in the Middle East.’” He added that the U.S. was postponing attacks on Iranian power plants for five days to allow talks to continue, a shift that briefly lifted sentiment.
The market response was visible in oil, where Brent crude fell 10.9% to settle at $99.94. Brent had been close to $120 at one point during the previous week, and it also dipped to as low as $96 immediately after Trump’s postponement announcement before recovering part of that drop.
In the U.S. market, benchmark crude showed a similar pattern of sharp initial movement followed by retracement. U.S. crude dropped toward $84 per barrel after the announcement, then “yo-yoed” back above $92 and ultimately settled at $88.13, down 10.3% from Friday.
On Wall Street, investors pushed major indexes higher. The S&P 500 rose 74.52 points, or 1.1%, to 6,581.00 for what AP described as its best day since the war began. The Dow Jones Industrial Average climbed 631.00, or 1.4%, to 46,208.47 after moving from a morning surge of nearly 1,135 points to a more modest gain by later trading. The Nasdaq composite jumped 299.15, or 1.4%, to 21,946.76.
The rally was tempered by immediate pushback from Iran. Iran denied that talks took place, and Iran’s parliament speaker Mohammad Bagher Qalibaf said on X that “fakenews is used to manipulate the financial and oil markets.”
The backdrop also included sharp U.S. warnings made over the weekend, when Trump threatened to “obliterate” Iran’s power plants if Iran did not open the Strait of Hormuz within 48 hours. The Strait of Hormuz has become a flashpoint for Trump and the wider economy because disruptions in shipping can prevent oil tankers from leaving the Persian Gulf to supply customers globally.
After Trump’s Monday comments, Iranian media outlets Fars and Tasnim portrayed the U.S. president as backing down, while Turkey and Egypt said they had spoken to the warring parties—AP described that as a first sign of coordinated mediation. The episode left markets watching not only prices, but also whether official statements aligned across sides.
Bond markets also eased after Trump’s remarks, with Treasury yields pulling back. The yield on the 10-year Treasury fell to 4.35% from 4.39% late Friday, though it remained above 3.97% from just before the war began. Traders have been focused on how high oil prices and wider market disruption could keep the Federal Reserve from cutting rates.
Stocks tied to energy use and transport helped lead the day’s moves as crude prices fell. Norwegian Cruise Line Holdings surged 6.2%, United Airlines rose 4.5%, and American Airlines gained 3.6%, though AP noted each was still down for the year. Shares of smaller companies also moved higher, with the Russell 2000 index jumping 2.3%.
AP said markets have experienced “vicious swings” since the war began, with uncertainty over how long it could last driving repeated up-and-down moves. The fear is that a prolonged disruption could keep oil and natural gas off global markets, fueling a wider wave of inflation for the global economy.