United States equities advanced on Monday (Tuesday AEST) as investors grew optimistic that a diplomatic agreement between the U.S. and Iran could still be reached, even as geopolitical tensions remained elevated.
The Dow Jones Industrial Average climbed 301.7 points or 0.6% to close at 48,218.3. The S&P 500 rose 69.4 points or 1% to 6,886.2, while the Nasdaq Composite outperformed with a gain of 280.8 points or 1.2%, to finish at 23,183.7.
Markets extended gains after President Donald Trump signalled renewed communication between the two sides. “We’ve been called by the other side,” Trump said. “They’d like to make a deal very badly.”
The comments came shortly after the U.S. implemented a blockade of the Strait of Hormuz, following the collapse of weekend peace talks in Islamabad that failed to produce a breakthrough.
The blockade, which took effect on Monday, restricts maritime traffic to and from Iranian ports, although U.S. Central Command clarified that vessels transiting the strait to non-Iranian destinations would not be impeded.
The breakdown in negotiations reignited concerns that the conflict could be prolonged, with implications for global energy markets and economic stability.
Oil prices moved higher in response, with West Texas Intermediate crude rising 2.6% to settle at US$99.08 per barrel, while Brent crude surged 4.4% to $99.36 per barrel.
Vice President JD Vance departed Islamabad without securing an agreement, citing Iran’s unwillingness to halt its pursuit of nuclear weapons.
However, broader disagreements persist, with Tehran reportedly demanding control over the Strait of Hormuz, war reparations, and the release of frozen assets.
Despite the impasse, diplomatic efforts are ongoing. Mediators from Pakistan, Egypt and Turkey are expected to continue facilitating discussions between the two nations in the coming days, according to Axios, citing regional and U.S. officials.
Meanwhile, Trump is reportedly considering resuming military strikes after ordering a naval blockade, according to The Wall Street Journal.
Investor sentiment has remained supported by expectations that the conflict could ultimately be contained. That optimism helped drive all three major indices to their strongest weekly performance since November in the previous week, following the announcement of a temporary two-week ceasefire.
The S&P 500 gained 3.6% over the week, while the Nasdaq jumped 4.7% and the Dow added 3%.
In a sign of continued confidence in equities, BlackRock lifted its outlook for U.S. stocks, pointing to a “contained” macroeconomic impact from the conflict and resilient corporate earnings as supportive factors for further gains.
Technology stocks led Monday’s advance, with strong performances from major software companies. Microsoft rose 3.6%, while Oracle surged 12.7%.
Among individual movers, Allogene Therapeutics rallied 12.5% after reaching its highest level in more than two years earlier in the session. The gains followed interim data from a mid-stage study indicating that its blood cancer therapy reduced the risk of relapse in patients.
In contrast, airline stocks came under pressure as higher oil prices raised concerns about fuel costs. United Airlines and Delta Air Lines both fell more than 1%, while American Airlines declined 0.8%.
Fastenal shares dropped 6.9% after the industrial supplies distributor reported earnings that disappointed investors.
Sandisk shares jumped 11.8% amid expectations that the memory chipmaker will be added to the Nasdaq-100 index on 20 April, boosting investor demand.
On the macroeconomic front, data showed that U.S. existing home sales fell to a nine-month low in March, reflecting tight housing supply and growing concerns about labour market conditions.
Attention now turns to the banking sector, with investors awaiting earnings reports from major financial institutions including JPMorgan, Citi and Wells Fargo on Tuesday.
In fixed income markets, Treasury yields edged lower, with both the 10-year and 2-year yields falling 0.6% to 4.293% and 3.776%, respectively.
