Dow closes wild session up 200 points as oil reverses lower

Dow closes wild session up 200 points as oil reverses lower and Trump signals Iran war near an end The SP 500
made a comeback from earlier losses on Monday after President Donald Trump said the war with Iran could be reaching its end.

The broad market index rose 0.83%, while the Dow Jones Industrial Average added 239.25 points, or 0.5%. The blue-chip index is coming off its biggest weekly slide in nearly a year. The Nasdaq Composite
jumped 1.38%. Those moves mark an impressive turnaround from the losses seen earlier in the day. The Dow was down nearly 900 points at its session low, and the SP 500 and Nasdaq lost as much as 1.5% each.

On Monday, Trump told a CBS News reporter, who shared the comments in a post on X, that the war is very complete, pretty much.

They have no navy, no communications, theyve got no Air Force, the president said, adding that the U.S. is very far ahead of his initially stated timeframe for the war of four to five weeks.

Trump also said that ships are now passing through the Strait of Hormuz and that he is thinking about taking it over.

West Texas Intermediate
crude fell 9% to $81 a barrel following the developments. It broke above $100 per barrel in overnight trading to hit more than $119, its first time above the $100 level since 2022, when investors were reacting to the aftermath of Russias invasion of Ukraine. International benchmark Brent
crude pulled back 8% to $84 a barrel. U.S. oil prices began the year below $60 a barrel.

The broader market was also helped by a rise in semiconductor stocks. Broadcom
advanced more than 3%, while Micron Technology
and Advanced Micro Devices
increased 2% each. Nvidia
climbed almost 1%.

Oil prices jumped after major Middle East producers slashed their output due to the closure of the key Strait of Hormuz. Kuwait announced cuts but did not say by how much, while Iraq has reportedly seen its production fall 70%.

Energy ministers from the Group of Seven nations namely, Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S. are planning to meet virtually on Tuesday morning to discuss potentially releasing oil reserves. The groups finance ministers met on Monday to discuss a release, though they did not make a decision.

The $100 oil level was seen by many on Wall Street as a breaking point for the economy unless the war is resolved quickly and prices retreat. Trump posted Sunday evening that a gain in short term oil prices was a very small price to pay for destroying Irans nuclear threat.

We cant rule out a bear market if investors start to anticipate a Stagflating 1970s Redux scenario, wrote Ed Yardeni, president and chief investment strategist for Yardeni Research. If the oil shock persists, the Feds dual mandate would be stuck between the increasing risk of higher inflation and rising unemployment.

Though there was an initial spike in oil prices Monday, the moves in energy stocks were only minimal during the session a sign that investors may be holding out hope for a favorable outcome of the war, according to John Luke Tyner of Aptus Capital Advisors.

The market is still kind of pricing that this is going to be rather short-lived, the portfolio manager and head of fixed income said. However, a quick surge of 10% or 15% in the State Street Energy Select Sector SPDR ETF (XLE)
would mean the market is pricing in that the war is going to take a long time, and theres a lot of oil supply thats either stuck or been destroyed.

If the war indeed continues on longer than anticipated, a drawdown on the SP 500 to around 6,200 is not out of the question, Tyner said.