Dow gains 200 points as oil trades into the red despite U.S. bombing of Iran: Live updates

Stocks were higher on Monday even after the United States entered Israel’s war against Iran over the weekend by striking three nuclear sites as the increase in oil prices was relatively tame.

The Dow Jones Industrial Average added 189 points, or 0.4%. The S&P 500 gained 0.5%, while the Nasdaq Composite was 0.5% higher.

Investors also weighed comments from Federal Reserve Governor Michelle Bowman that said she would be in favor of the central bank cutting interest rates at the July policy meeting. Her comments follow similar sentiment from peer Governor Christopher Waller on Friday.

Investors were largely focusing on oil prices, which were surprisingly trading in the red, as well as any news of a potential response from Iran. U.S. oil slipped more than 1% on Monday after Trump said in a Truth Social post that “everyone” should keep oil prices low, and doing otherwise “play into the hands of the enemy.”

Oil prices had already spiked in recent weeks following the increased tensions in the Middle East. U.S. crude oil futures on Sunday night reached highs not seen since January before paring those gains.

“Markets only care about oil supply shocks, so as long as that stay at bay, we’ll see markets sharply higher,” said Jamie Cox, managing director at Harris Financial Group. “Regardless of whether the President oversold the effectiveness of the strikes or not, the nuclear program is Iran was set back decades.”

The U.S. launched attacks Saturday at Iranian sites in Fordo, Isfahan and Natanz, surprising investors who were expecting more diplomacy to possibly take place after Trump said on Friday that he would make a decision to attack Iran “within the next two weeks,” according to the White House

Trump said in a Saturday evening speech from the White House after the attacks that “there will be either peace, or there will be tragedy for Iran far greater than we have witnessed over the last eight days.”

Now traders braced for Iran’s retaliation with the hope that the country would not use an option that could risk a broader conflict and the removal of the regime there. Iran could target U.S. personnel in nearby bases or close the Strait of Hormuz, which would majorly disrupt global oil flows. A prolonged blocking of the strait could boost oil prices above $100 per barrel. In a Sunday interview, with Fox News, U.S. Secretary of State Marco Rubio called for the Chinese government to step in and prevent Iran from closing the key trade route. China remains Iran’s most important oil customer.

“While Iran has flirted with closing the Strait of Hormuz, investors aren’t terribly panicked about an oil market calamity, an equanimous view that’s appropriate at this point,” wrote Adam Crisafulli of Vital Knowledge in a Monday note. “Geopolitical risks are undoubtedly elevated in the Middle East right now, but our view remains that the extreme asymmetry of the conflict (with Iran’s military capabilities, and those of its proxy partners, significantly degraded), coupled with Tehran’s relative isolation (with few, if any, allies willing to come to its assistance) and ample global oil supplies, will help keep the fallout contained.”

A greater war in the Middle East adds another threat to the stock market and the economy, already dealing with a rushed remaking of global trade by Trump this year.

“Despite all the heat generated by Trump’s tariff turmoil and now the war in the Middle East, the US economy continues to display its resilience, as it has over the previous three years when Russia invaded Ukraine and the Fed tightened monetary policy,” wrote Ed Yardeni, president and chief investment strategist of Yardeni Research, in a Sunday note