US Stocks Soar, Oil Prices Plunge as Market Fears of Israel–Iran Conflict Spreading Fade: Analyst

The blue-chip Dow Jones Industrial Average closed up by more than 300 points.

Wall Street in New York City on April 4, 2025. Samira Bouaou/The Epoch Times

U.S. stocks surged at the start of the trading week, rebounding from Friday’s selloff sparked by geopolitical tensions following Israel’s large-scale attack on Iran.

“The declines weren’t as bad as feared,” Tom Essaye, the president and co-founder of Sevens Research Report, said in a note emailed to The Epoch Times on Monday. “The market views the chances of the conflict spreading as relatively low.”

The blue-chip Dow Jones Industrial Average rose 317.3 points, or 0.75 percent, to close at 42,515, after surging more than 500 points during morning trading.

The broader S&P 500 ended up 56.14 points, or 0.94 percent, while the tech-heavy Nasdaq Composite Index advanced 294.39 points, or 1.52 percent, at the close.

Asian stocks also bounced back. The Hang Seng Index climbed 0.7 percent and the Shanghai Composite Index rose 0.35 percent. The Nikkei picked up 1.26 percent.

Israel and Iran have exchanged missile attacks since Friday, and the situation in the Middle East is expected to be a major topic at the G7 Summit in Canada.

The market rebound suggests that traders anticipate the conflict will be contained rather than expanded to the broader region.

West Texas Intermediate (WTI) crude oil futures fell by $1.5, or 2.06%, to close at $71.48 a barrel on the New York Mercantile Exchange.

Brent, the international benchmark for oil prices, declined $0.59, or 0.81%, to end at $72.63 per barrel on London’s ICE Futures exchange.

Since Tehran’s military capabilities have been degraded and the country is not a significant contributor to global oil markets, the conflict is likely to be limited, Essaye said.

“If either of those assumptions change (that a broader war will occur or oil prices will sustainably rise), then the market will care about this conflict (and it will be negative for stocks),” he added.

Iran produces approximately 3.3 million barrels per day.

Natural gas prices extended their gains, climbing 4.47 percent to close at $3.74 per million British thermal units.

Despite the drop in oil prices, concerns persist over potential supply disruptions in the Strait of Hormuz, said Jay Woods, the chief global strategist at Freedom Capital Markets.

This narrow strait processes approximately 20 million barrels of crude oil daily and is a critical location for flows of global liquefied natural gas (LNG).

“Given the spike in oil, the unrest in the Middle East and quite frankly the lack of many market moving earnings, this week we skate to where the puck is - or in this case where traders eyes will be focused - the energy sector,” Woods said in a note emailed to The Epoch Times. “We have witnessed this sector spike due to conflicts in the past and moves can come quickly.”

An explosion is seen during a missile attack in Tel Aviv, Israel, on June 15, 2025. Leo Correa/AP

Fleeing Shelter

Gold, a conventional safe-haven set, plunged about 1.4 percent to around $3,404 per ounce on the COMEX division of the New York Mercantile Exchange.

Silver, the sister commodity to gold, was little changed at $36.37 an ounce.

The two primary precious metals have had a solid first half of 2025, with gains of 30 percent and 24 percent, respectively.

The benchmark 10-year U.S. Treasury bond yield rose 0.63 percent to 4.45 percent.

The U.S. Dollar Index (DXY), a measure of the greenback against a weighted basket of currencies, was little changed at 98.15. The index has crashed this year, falling nearly 10 percent.

Watching the Calendar

The Federal Reserve’s June policy meeting begins on June 17.

Investors overwhelmingly expect the U.S. central bank to leave interest rates unchanged for the fourth consecutive month at a range of 4.25 to 4.5 percent.

Federal Reserve Chair Jerome Powell has come under pressure to lower interest rates after last week’s better-than-expected inflation readings.

Woods said monetary policymakers have pivoted from being data-dependent to focusing on tariffs and geopolitical unrest.

“As always, it will be the tone [Powell] sets in the statement and subsequent press conference that will move markets,” Woods said. “Will the master wordsmith in Jerome Powell be able to split the uprights and keep his patient approach when it comes to rates? Will he be able to speak in a way that doesn’t upset markets?”

Market watchers will also keep an eye on updates to the Summary of Economic Projections. This is a quarterly survey highlighting officials’ expectations for policy and the broader economy.

The March survey saw officials pencil in interest rates being 50 basis points lower—or two quarter-point cuts—by the end of the year.

This week, economic observers will also monitor import and export prices, manufacturing production, and jobless claims. The U.S. government will also publish the latest Treasury International Capital report, which could confirm whether foreign investors are dumping bonds and contributing to the Treasury market’s substantial volatility.