Wall Street staged a robust comeback on June 16, with the S&P 500 surging 1.10% and the NASDAQ climbing 1.43%, as investors shook off the previous session’s sharp losses triggered by escalating hostilities between Israel and Iran. Monday’s gains reflected a renewed risk appetite, buoyed by hopes that the immediate threat of a broader regional war was receding and that ceasefire prospects were gaining traction.
The rebound followed a tumultuous Friday, when global markets tumbled amid fears that missile strikes and retaliatory attacks could spiral into a wider Middle East conflict. That risk sent investors flocking to safe havens like gold and the U.S. dollar, while oil prices spiked on supply disruption concerns. However, as the new trading week began, sentiment shifted.
Reports emerged suggesting that Tehran was seeking to reduce hostilities, and diplomatic efforts appeared to be gaining momentum. This easing of tensions prompted a swift reversal in risk assets, with equities rallying and oil prices retreating from their highs.
Early in the session, the S&P 500 and NASDAQ led the charge higher, reclaiming ground lost in the prior selloff. The Dow Jones Industrial Average also participated in the rally, rising by nearly 1%. The technology and healthcare sectors were among the strongest performers, helping to lift the broader market. Meanwhile, defense stocks, which had surged on Friday, stabilized as the immediate threat of escalation appeared to diminish.
Oil markets mirrored the shift in sentiment. After a brief surge, crude prices fell back by nearly 2%, with benchmark U.S. oil dropping to around $72 per barrel. This pullback alleviated some inflationary concerns and contributed to the improved mood among equity investors.
Looking ahead, market participants remain vigilant. The Federal Reserve’s upcoming policy meeting is in sharp focus, with expectations that interest rates will remain unchanged. Investors are also closely monitoring geopolitical developments, wary that any renewed escalation could quickly reverse the market’s gains.
Despite lingering uncertainties, Monday’s rally underscored the market’s resilience and its sensitivity to global headlines. As hopes for a ceasefire between Israel and Iran grow, investors appear willing to embrace risk once again, at least for now.
