S&P 500 Up 1% as ‘Scripted’ Iran Attacks Sink Oil: Markets Wrap

(Bloomberg) — Wall Street traders drove stocks higher as oil tumbled, with Iran’s retaliatory strikes at a US air base in Qatar seen as symbolic and unable to trigger a broader economic fallout. The dollar fell.

The S&P 500 extended its gain to 1% as President Donald Trump raised hopes of de-escalating the Middle East conflict, saying the Iranian attack was “very weak” and telegraphed by Tehran. West Texas Intermediate sank below $70. As worries about an imminent threat to inflation abated, Treasury yields slid. The move was also fueled by a Federal Reserve official saying rates could drop as soon as July.

Subscribe to the Stock Movers Podcast on Apple, Spotify and other Podcast Platforms.

Iran fired missiles at a US air base in Qatar earlier Monday after promising it would respond “proportionately and decisively” to the weekend bombing by American forces of three nuclear facilities. Qatar said the missile barrage was intercepted and the base had been evacuated in advance. A controlled geopolitical response may reduce the prospect of a broader supply-chain shock.

To Krishna Guha at Evercore, the symbolic strike allows Iran to claim that it has retaliated against the US military, while sending a clear message it doesn’t want to get drawn into a war with the US it cannot win, which would threaten its regime stability.

“It is possible that Iran will fire against other US bases in the region in the coming days, but such attacks are not likely to be any less ‘scripted’ than this attack, de facto sealing a de-escalatory Iranian stance,” said Jacob Funk Kirkegaard at 22V Research. “Today’s attack hence should serve to lower global geopolitical risk premia affecting crude oil and gas trade in the Gulf region.”

The Middle East accounts for about a third of global crude production and there haven’t yet been any signs of disruption to physical oil flows, including for cargoes going through the Strait of Hormuz. Since Israel’s attacks began earlier this month, there have been signs that Iranian oil shipments out of the Gulf have risen rather than declined.

“The Iranian response today seems manageable and perhaps a clearing event,” said Michael Bailey at FBB Capital Partners. “Lower oil prices are providing a release valve for stress that built up over the weekend, also allowing the bull case of steady global growth to continue.”

While a closure of the Strait of Hormuz by Iran would be the biggest upside risk to oil, investors should lean against overshoots in crude prices, according to Elias Haddad at Brown Brothers Harriman & Co. 

“First, Iran relies heavily on this passageway for its own exports. Closing it is unlikely as it would cripple its own economy. Second, the US and allies maintain strong naval presence in the region. Blocking the strait could trigger more severe military repercussions against Iran,” he said.

Oil prices traded in a $10-a-barrel range on Monday, first rising by more than 6% only to drop even more, underscoring just how on edge traders are and how critical every development in the region is to global energy markets.

While the conflict in the Middle East is dominating headlines, selloffs caused by geopolitical events tend to be brief, according to Morgan Stanley strategists. 

“History suggests most geopolitically-led selloffs are short-lived/modest,” strategists led by Michael Wilson wrote in a note on Monday. “Oil prices will determine whether volatility persists.”

According to the Morgan Stanley team, prior geopolitical risk events have led to some volatility for equities in the short term, but one, three and 12 months after the events, the S&P 500 has been up 2%, 3%, and 9%, on average, respectively.

Meantime, bond investors watching the latest geopolitical developments are on alert for hints on when the Fed will deliver the two 2025 rate cuts officials projected at their latest policy meeting.

Fed Chair Jerome Powell will have two chances this week to explain to lawmakers why he and most of his fellow policymakers seem resolved to continue holding interest rates steady at least until September, ignoring Trump’s persistent calls to lower borrowing costs.

He will testify before the House Financial Services Committee at 10 a.m. Tuesday, and at the same time on Wednesday before the Senate Banking Committee.

Money markets boosted bets on policy easing as Fed Governor Michelle Bowman said she would support lowering rates as soon as July. Her remarks echoed those from Fed Governor Christopher Waller, who said Friday the central bank can slash rates as early as next month, reiterating his view that the inflation hit from tariffs is likely to be short-lived.

Fed Bank of Chicago President Austan Goolsbee said the central bank could resume rate cuts if the inflation hit from tariffs remains subdued, without weighing in on the exact timing of such a move.

Corporate Highlights:

• Tesla Inc. jumped after the electric-vehicle giant rolled out its long-promised driverless taxi service to a handful of riders.
• Novo Nordisk A/S scrapped a partnership with Hims & Hers Health Inc. after less than two months, saying the US company is using “deceptive marketing” to sell copycat versions of its obesity blockbuster Wegovy.
• Northern Trust Corp. said it plans to remain a standalone company following a report that Bank of New York Mellon Corp. approached it about a possible merger.
• Meta Platforms Inc.’s WhatsApp messaging platform has been added to a list of apps banned from government-issued devices for congressional staffers in the US House of Representatives, a move driven by concerns about the app’s data security.
• VSCO, the popular photo-editing and social media app, is planning to release its own camera software for iPhones, as it joins a growing wave of third-party developers offering an alternative to Apple Inc.’s own camera experience.
• Ford Motor Co. intensified its campaign to preserve clean energy manufacturing subsidies Monday, warning jobs at its electric-vehicle battery plant in southwestern Michigan could be at risk if Republicans in Congress pare back tax credits in President Donald Trump’s multi-trillion dollar economic package.
• Fiserv Inc. is lauching its own stablecoin and joining with both traditional and crypto payments firms PayPal Holdings Inc. and Circle Internet Group Inc. to develop products for financial institutions and merchants within the banking technology provider’s ecosystem.
• Residential real estate brokerage Compass Inc. sued Zillow Group Inc., alleging that the home-search website is using “anticompetitive tactics” with its plan to restrict certain listings.
• Omnicom Group Inc., the third-largest US advertising agency, agreed to stop withholding online ads for political reasons to clear the way for federal antitrust regulators to approve the company’s $13.5 billion buyout of rival Interpublic Group.
• Spanish drugmaker Grifols SA paid a higher price to buy blood plasma from an entity linked to its controlling family than from third-party suppliers, according to a regulator’s findings submitted in a court case.
• Huawei Technologies Co.’s latest computer product is powered by a chip manufactured using years-old technology, suggesting US sanctions are still preventing China from developing cutting-edge semiconductor technologies.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 1% as of 4 p.m. New York time
• The Nasdaq 100 rose 1.1%
• The Dow Jones Industrial Average rose 0.9%
• The MSCI World Index rose 0.7%
• Bloomberg Magnificent 7 Total Return Index rose 1.6%
• The Russell 2000 Index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.5% to $1.1579
• The British pound rose 0.6% to $1.3527
• The Japanese yen was little changed at 146.15 per dollar

Cryptocurrencies

• Bitcoin rose 3.7% to $103,275.07
• Ether rose 5.8% to $2,314.64

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.34%
• Germany’s 10-year yield declined one basis point to 2.51%
• Britain’s 10-year yield declined four basis points to 4.49%

Commodities

• West Texas Intermediate crude fell 8% to $67.96 a barrel
• Spot gold rose 0.2% to $3,376.72 an ounce

–With assistance from Vildana Hajric.

©2025 Bloomberg L.P.