Dow Jones gain 50 points, S&P, Nasdaq decline as oil surges on Trump's warning

US stocks ended mostly lower on Monday as rising oil prices and escalating geopolitical tensions in the Middle East weighed on investor sentiment, offsetting optimism around diplomatic signals from Washington.

The S&P 500 fell about 0.4%, moving closer to correction territory and extending its decline to roughly 9.3% from its recent peak.

The Nasdaq Composite dropped 0.73%, pressured by weakness in technology stocks, while the Dow Jones Industrial Average edged higher by around 0.1% or by 50 points.

Oil surge and geopolitics weigh on sentiment

Investor focus remained firmly on energy markets, where prices have surged since the start of the Iran conflict.

US crude oil settled 3.25% higher at $102.88 per barrel, its highest close since July 2022, while Brent crude traded near $112–$114 and remained on track for its steepest monthly gain on record.

The rally in oil has heightened concerns about inflation and economic growth, particularly as the conflict in the Middle East continues to escalate.

Yemen’s Iran-backed Houthi militia entered the war over the weekend, adding to uncertainty.

Donald Trump added to market volatility with mixed messaging on the conflict.

While signaling potential progress in negotiations, he reiterated a hardline stance on reopening the Strait of Hormuz, stating that the United States is in serious discussions with a “more reasonable regime” to end military operations in Iran.

He also warned that if a deal is not reached shortly and the Strait is not reopened, the US could escalate attacks on Iranian energy infrastructure.

Market participants noted the conflicting signals. Rick Meckler, partner at Cherry Lane Investments, said in a Reuters report that the administration continues to send mixed messages, adding that when the messages seem positive, they support markets, but more aggressive signals tend to trigger sell-offs.

Tech drags while financials gain

Technology stocks were among the biggest drags on the broader market, falling more than 1% and pulling the Nasdaq lower.

At the same time, the CBOE Volatility Index briefly traded above 30, reflecting elevated market anxiety.

Despite broader weakness, some sectors posted gains.

Financial stocks advanced after the US Department of Labor issued new guidance clarifying how alternative assets can be incorporated into 401(k) retirement plans.

Shares of asset managers including Blackstone Inc. and Carlyle Group. moved higher on expectations that the rule could unlock a new source of capital.

Markets have also shown uneven trading patterns in recent weeks, with investors increasingly cautious heading into weekends amid geopolitical risks.

David Wagner, head of equities at Aptus Capital Advisors, noted in a CNBC report that markets have tended to perform better earlier in the week, with weaker returns toward the end, reflecting hedging behavior ahead of potential news developments.

Powell signals patience as rate cut bets fade

Comments from Jerome Powell offered some support to markets, though they did little to reverse losses.

Powell said inflation expectations remain well anchored beyond the short term despite the energy-driven shock.

He added that policymakers are not yet in a position to respond, noting that they do not yet know what the economic effects will be and that policy is in a good place to wait and see. He also said the Fed could eventually face the question of how to respond, but is not at that point yet.

Following his remarks, the yield on the 10-year Treasury declined, indicating some relief in bond markets.

However, expectations for monetary easing have shifted significantly.

According to CME Group’s FedWatch Tool, traders have largely priced out rate cuts this year, compared with earlier expectations for two cuts before the conflict began.

Market outlook remains fragile

Wall Street is coming off a difficult stretch, with the Dow, Nasdaq and S&P 500 all logging five consecutive weekly declines.

The Dow and Nasdaq have already entered correction territory.

While early-session gains suggested some optimism around diplomatic progress, persistent geopolitical risks and surging energy prices continue to cloud the outlook.

For now, markets appear caught between hopes for de-escalation and the economic impact of sustained high oil prices, leaving investors cautious in the near term.