Key Takeaways
- Stock futures plunged Monday morning as Iran responded to Trump’s warnings with renewed attacks
- Markets reversed dramatically after Trump announced a postponement of military action against Iran citing fruitful diplomatic discussions
- Dow, S&P 500, and Nasdaq futures each surged more than 2% following the announcement
- Crude oil briefly crossed the $100 threshold before retreating on reduced geopolitical tensions
- Small-cap stocks bounced back after the Russell 2000 confirmed entry into correction territory, down over 10% from January highs
Wall Street experienced dramatic volatility Monday as stock futures plummeted early before rallying sharply when President Trump announced a delay in planned military operations against Iran, attributing the decision to constructive diplomatic exchanges with Tehran.
The morning session opened with substantial declines across major indices. Dow Jones Industrial Average futures retreated approximately 0.8%. Futures tied to the S&P 500 dropped 0.7%, while Nasdaq 100 futures experienced the steepest decline at roughly 1%.
The selloff followed fresh military actions by Iran earlier Monday. Trump had delivered a weekend ultimatum threatening to target Iranian energy infrastructure should the Strait of Hormuz remain blocked beyond a 48-hour window.
Iran’s Revolutionary Guards responded with counter-threats, warning they would strike Israeli power facilities and infrastructure supporting US military installations in the Gulf region if Trump proceeded with his pledge to dismantle Iran’s electrical grid.
Investor anxiety had already intensified following a month-long downturn on Wall Street. The Nasdaq recorded its largest weekly decline since early February in the prior week.
Crude Oil Breaks $100 Before Retreating
Oil prices skyrocketed as tensions mounted. West Texas Intermediate crude futures briefly touched the $100 per barrel mark. Brent crude, the international pricing benchmark, exceeded $113 per barrel.
Elevating oil prices sparked worries about inflationary pressures and potential Federal Reserve policy responses. Gold futures, which had maintained positive returns for the year, surrendered their 2026 gains amid speculation the Fed might extend its current rate stance.
Markets pivoted when Trump shifted his approach. He revealed that military strikes would be delayed following constructive diplomatic talks with Iran. Trading sentiment transformed rapidly.
Major Indices Stage Dramatic Turnaround
By midday, Dow futures had exploded upward more than 1,100 points, representing approximately 2.5% gains. S&P 500 futures climbed over 2.3%, with Nasdaq 100 futures advancing 2.4%.
Europe’s STOXX 600 index moved into positive territory. Precious metals strengthened. Oil prices tumbled following Trump’s statement.
The CBOE Volatility Index, commonly regarded as Wall Street’s fear indicator, declined after reaching a two-week peak. The index last traded around 22.79, down roughly 4 points.
Russell 2000 futures, representing small-capitalization stocks, soared 4.7% after opening more than 1% lower. The small-cap benchmark had closed Friday over 10% beneath its January 22 all-time high, officially confirming correction status.
Chris Beauchamp, chief market analyst at IG Markets, commented: “This is obviously a postponement, not a complete ceasefire, and we will see what happens from here. What’s done is still not undone, so the impact has yet to be seen, but obviously, markets are breathing a sigh of relief.”
The Russell 2000’s correction confirmation and the Nasdaq’s four-week decline represented the most significant concerns facing investors entering Monday’s trading session.
