U.S. stocks rise as S&P 500 and Nasdaq erase Iran war losses

American markets rose on Monday, as the S&P 500 and Nasdaq indices managed to erase all losses incurred since the outbreak of the war between Iran and the United States. The Dow Jones Industrial Average rose by 0.63% (301.68 points) to close at 48,218.25 points. The Nasdaq Composite index also climbed by 1.23% (280.84 points) to reach 23,183.74 points, while the S&P 500 index added 1.02% (69.35 points) to close at 6,886.24 points.

Trump's statements support sentiment

This rise brought the two main indices back above pre-war levels, reflecting a rapid recovery in investor sentiment after last week's temporary truce and the start of the earnings season. Technology stocks led the gains after U.S. President Donald Trump told reporters that Iran "wants to reach a deal badly," which helped offset concerns raised by Washington's announcement of the start of a naval blockade of Iranian ports. Weekend talks in Islamabad ended without progress, but signals from Washington kept diplomatic hopes alive.

Oil approaches $100 and mediators intervene

Oil prices rose due to supply concerns related to the Strait of Hormuz, but declined later, as Brent crude settled at $99.36 per barrel and West Texas Intermediate at $99.08. Pakistan, Egypt, and Turkey are expected to continue mediation efforts between Washington and Tehran, according to a report by Axios. International Energy Agency Executive Director Fatih Birol warned that more than 80 energy facilities in the Middle East have been damaged since February 28, and that restoring supplies could take two years. European markets closed with a slight decline, as the German DAX index fell by 0.26%.

Wall Street recorded a strong recovery on Monday, recovering all its losses resulting from the war between the United States and Iran, at a time when markets are still betting on the possibility of avoiding the worst-case scenario for the global economy.

The S&P 500 index rose by 1% to return to its levels before the start of the U.S. and Israeli attack on Iran in late February, becoming only about 1.3% below the record high it recorded this year. The Dow Jones also climbed 301 points or 0.6%, and the Nasdaq rose by 1.2%.

Even in the oil market, which saw a jump above $100 per barrel after the failure of ceasefire talks over the weekend, gains declined as Monday's session progressed. These movements reflect that financial markets are moving at a less intense pace compared to the large fluctuations that have prevailed since the beginning of the war.

Markets are living in a state of fluctuation between fears of the war continuing for a long time and hopes of reaching a settlement, especially since all parties benefit from the free flow of oil.

After the failure of weekend talks, U.S. President Donald Trump announced a blockade on the Strait of Hormuz, in an attempt to increase pressure on Iran and prevent it from benefiting from oil exports.

Any additional blockade is expected to reduce global oil supplies, after prices already jumped due to Iranian restrictions on ship movements in the Strait, a vital corridor through which a large part of Gulf oil passes to global markets.

Iran responded by threatening to target ports in the Arabian Gulf and the Gulf of Oman. After that, the price of Brent crude rose by 4.4% to close at $99.36, which is much higher than its pre-war level of about $70.

But the price is still lower than the peak it touched at $119 during previous peaks of tensions, and it also declined from the level of $104 it recorded earlier in Monday's session.

Samir Samana, head of global equity and real assets strategy at Wells Fargo Investment Institute, said: "Markets are deriving some optimism from the fact that the two parties are still talking and that the general ceasefire appears to be holding, so far."

Outside the White House, Trump indicated on Monday that the United States remains open to dialogue with Iran, saying: "I can say that we have received calls from the other side."

In contrast, major American companies began announcing their first-quarter results. Strong results may help ease concerns related to the Strait of Hormuz, as stocks in the long term tend to follow the direction of corporate earnings.

Goldman Sachs announced that it achieved profits amounting to $5.63 billion during the quarter, exceeding analysts' expectations. However, some indicators within the report raised concern, especially the decline in trading revenues for fixed income, commodities, and currencies, which led to the stock falling by 1.9%.

Major banks are expected to lead the quarterly results season, as JPMorgan, Citigroup, Wells Fargo, and Bank of America will announce their results during this week, alongside companies such as Johnson & Johnson, Netflix, and PepsiCo.

Among the most prominent gainers in Monday's session was SanDisk stock, which jumped by 11.8% after the announcement of its joining the Nasdaq 100 index on April 20, which means its entry into investment funds linked to the index such as Invesco's QQQ.

Oracle stock also rose by 12.7%, recovering part of its recent losses related to concerns about increasing its spending on artificial intelligence technologies.

Software company stocks also recorded gains, as ServiceNow shares rose by 7.3%, and AppLovin by 6.7%.

In the bond market, Treasury yields fell as oil prices declined, as the 10-year bond yield dropped to 4.29% compared to 4.31% at the end of the previous week.

This may provide some support for the housing market and mortgage rates, which have risen since the beginning of the war due to inflation fears resulting from rising oil prices. A report also showed that existing home sales in March came in weaker than economists' expectations.

As for global markets, declines prevailed in Europe and Asia, as the Hang Seng index in Hong Kong fell by 0.9%, and the KOSPI index in South Korea declined by the same percentage.