US Stocks Recover, Crude Oil Falls as Trump Raises Hopes of Short War

Key Takeaways

• US stocks closed higher, recovering from earlier declines.
• Oil prices pared back gains on Monday afternoon to less than $90 per barrel after surging to well over $100 per barrel on Monday morning.
• The reversal followed comments from President Donald Trump describing the war in Iran as “very complete.”

US stocks closed higher on Monday after a statement from President Donald Trump that the US war with Iran as “very complete” and “very far ahead of schedule.” Those remarks sparked a rebound from morning losses in the stock market. However, after the close of stock trading, Trump appeared to contradict those expectations.

Crude oil prices, which spiked on Monday morning amid production cuts and an exchange of strikes on oil storage facilities throughout the Middle East, fell sharply off their highs on Trump’s earlier comments.

The Morningstar US Market Index closed 0.85% higher, while the S&P 500 rose 0.83% and the tech-heavy Nasdaq 100 was up 1.38%. Gains were concentrated in growth stocks, with the large-cap growth category within the Morningstar Style Box up 1.65% compared with losses of 0.05% for the large-cap value category.

It was a major reversal from earlier in the day, when global stocks tumbled after production cuts and an exchange of strikes on oil storage facilities throughout the Middle East over the weekend. Even before Trump’s Monday comments, US stocks have significantly outperformed their global counterparts since the war began.

The Morningstar Europe Index slumped 0.83% in dollar terms on Monday, while Asian stocks closed nearly 3.90% lower. Market volatility, as measured by the Cboe Volatility Index, also spiked above 30 for the first time since April 2025’s tariff meltdown.

Energy Prices Spike, Then Retreat

Swings in the stock market continue to be driven by the price of oil as investors respond to the latest developments in the war with Iran. Major Middle Eastern energy producers, including Kuwait, Iran, and the United Arab Emirates, cut production amid ongoing strikes in the region, while Bahrain Petroleum Company became the region’s second producer after Qatar to declare force majeure.

Qatar’s energy minister told the Financial Times last week that continued disruption to Gulf energy exports could drive oil prices to $150 a barrel within two to three weeks.

US President Donald Trump wrote in a Sunday post on Truth Social that increased oil prices were a “very small price to pay” for the destruction of Iran’s nuclear capabilities.

Early Monday, Brent crude oil prices jumped around 30% to nearly $120 per barrel before paring those gains after officials from the Group of Seven nations signaled a readiness to release oil reserves to the market if needed. In midday trading in US markets, Brent crude was up 8% at $100, while WTI crude was up 5% at $96.

Prices fell back then significantly after Trump signaled the war might be nearing its end, with the WTI benchmark falling to $88 per barrel.

Earlier on Monday, South Korea’s KOSPI benchmark triggered its second circuit breaker since the outbreak of the war, sparking a wider regional selloff, after a ruling party lawmaker warned that the country’s key chip industry was concerned about higher energy prices and supply disruptions hampering production of critical semiconductors.

Indeed, surging energy prices are driving fears of a broader spike in inflation, which analysts warn could weigh on interest rates. Over the past week, traders have shifted their expectations away from rate cuts and toward likely hikes from the European Central Bank and the Bank of England this year, and potentially fewer cuts from the Federal Reserve.

US Treasury yields ticked slightly higher on Monday morning amid a broadening global bond rout, with the 10-year benchmark rising 0.02 percentage points to 4.156% before falling back to 4.112%. Gold fell 0.15% to $5,150.

“History suggests marked and persistent spikes in the price of crude can trigger persistent inflationary cycles,” Bank of America analysts write in a note. “The initial base case with oil prices around $15 higher than the prewar level was not particularly concerning for inflation. But the most recent escalation leading oil prices to rise above $100 could become concerning if it proves persistent.”