Major U.S. indexes were higher on Monday after President Donald Trump said he would order the military to delay strikes against Iran’s power plants and energy infrastructure following “productive talks” with Tehran.
Iran’s Fars News Agency, however, denied Trump’s statement, citing a source who said there was no direct communication with the United States, even through intermediaries. Israel’s military says it is carrying out strikes on Iran.
However, global markets made a big recovery after Trump’s comments, with Europe’s STOXX 600 and precious metals turning positive, while oil prices fell, indicating improving appetite.
Markets were trading lower after Iran’s Revolutionary Guards said Tehran would attack Israeli power plants and plants that supply US bases in the Gulf if Trump carried out his threat to “destroy” Iran’s energy network.
“This is exactly what the market needed to hear to correct the worst price expectations. This means that there is a high probability that the Strait of Hormuz will be reopened; it costs almost immediately,” said Fiona Cincotta, senior market analyst at City Index.
The recovery depends on “we get more supportive comments, especially from Iran” that progress is being made, he said.
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At 08:03 am ET, Dow E-minis were up 653 points, or 1.42 percent, S&P 500 E-minis added 85.25 points, or 1.3 percent, and Nasdaq 100 E-minis gained 312 points, or 1.29 percent.
The CBOE Volatility Index – a gauge of Wall Street’s fears – retreated after reaching its highest level in two weeks – and ended up 0.30 points at 27.08.
Investors have decided to bet on an increase in interest rates from the US Federal Reserve after Trump’s comments, and now they stand at 20 percent in December, compared to more than 50 percent before, according to the FedWatch tool of the CME Group.
Markets lowered bets last week that no easing was expected in 2026 after the Federal Reserve struck a hawkish tone, signaling higher inflation and one rate cut this year.
Futures that track the Russell 2000 index rose 2.5 percent, after falling more than 1 percent earlier. The small-cap index, which is sensitive to higher interest rates, ended more than 10 percent below its record close on January 22 on Friday, confirming that it was in a correction zone.
Oil prices fell more than 13 percent and energy stocks returned gains. Exxon Mobil and Chevron lost more than 1 percent in market trading, while Occidental Petroleum fell 4.5 percent..
Airlines jumped, with American Airlines and United Airlines adding more than 4 percent each.
Banks, which had sold heavily during the crisis, rose, with JPMorgan Chase and Goldman Sachs adding 1.6 percent each.
Wall Street’s main indexes posted their fourth straight week of declines on Friday, while the Nasdaq posted its biggest weekly decline since early February.
Investors now await business activity surveys and consumer sentiment readings later in the week.
On a per-stock basis, Synopsys gained 4 percent before the bell after activist investor Elliott Investment Management made a multibillion-dollar investment in the electronic design automation company.
