S&P 500 Gains as Iran Response Eases Fears and US Rate Cut Hopes Grow

Market rallies as weak Iranian counterattack calms investors and Fed signals July interest rate reduction

US Stock Markets Rise Amid Middle East Tensions

The S&P 500 surged 0.94% on Monday, climbing 56 points to close higher as Wall Street welcomed a muted response from Iran following US strikes on nuclear sites. The Nasdaq Composite also rose 184 points (0.94%), while the Dow Jones Industrial Average added 375 points (0.89%).

Despite tensions, market sentiment turned optimistic after Iran launched a limited missile attack on a US base in Qatar, reportedly after warning Qatari officials in advance. No casualties or major damage were reported, reducing fears of escalation.

Trump Welcomes Iran’s “Weak” Response

Former US President Donald Trump downplayed the missile strike, calling it a “very weak” response.

“13 missiles were intercepted, and one was harmless. No Americans were harmed,” he said.
“Hopefully, this is the end of the hate. I thank Iran for the early warning.”

Trump’s tone suggested de-escalation might now be possible, calming investor nerves.

Iran Threatens Hormuz but Oil Prices Drop

Although Iranian media hinted at a possible closure of the Strait of Hormuz—a vital global oil shipping route—markets appeared unconcerned. Both Brent crude and West Texas Intermediate (WTI) prices fell sharply:

• Brent crude: down 7.5% to $69.82 per barrel
• WTI crude: down 8.1% to $67.88 per barrel

The price drop was driven by signs that conflict escalation may be contained, and by Trump urging oil producers to keep prices down.

“Everyone, keep oil prices down, I’m watching,” he posted online, followed by:
“Drill, baby, drill — I mean now.”

Fed Signals July Rate Cut as Inflation Softens

Investor confidence also received a boost from dovish comments by Federal Reserve Governor Michelle Bowman. Speaking in Prague, Bowman said she would support a rate cut at the Fed’s July meeting, noting:

• Trump’s new tariff plans are likely to have limited inflation impact
• If current trends continue, she backs lowering the policy rate to a more neutral level

Fed Chair Jerome Powell is expected to testify before Congress later this week, with markets watching closely for further signs of support for easing monetary policy.

Market Outlook: Risk Eases, Rate Cuts Ahead?

Despite ongoing geopolitical uncertainty, the restrained Iranian response and hints of US interest rate cuts have helped steady global markets.

Analysts from Vital Knowledge wrote:

“The weekend’s events may have reduced the cloud of uncertainty, turning a potential negative into a near-term positive.”

Summary

• S&P 500, Nasdaq, and Dow all gained ~1% on easing geopolitical fears
• Iran’s limited missile response and Trump’s conciliatory tone calm markets
• Oil prices fell despite threats over the Strait of Hormuz
• Federal Reserve likely to cut rates in July, boosting investor sentiment

Sources: (Investing.com, Reuters.com)