Stocks rebounded Monday as initial shocks from the conflict between Israel and Iran faded on reports that Tehran is open to negotiations. The price of oil also eased after spiking overnight, offering investors another relief sign as the broader market remains near record highs.
The Dow Jones Industrial Average (NYSE: DIA) soared over 300 points on Monday, while the S&P 500 Index (NYSE: SPY) and Nasdaq Composite (NASDAQ: QQQ) added about 1% and 1.5%, respectively.
Wall Street has been paying close attention to escalating tensions in the Middle East after Israel launched an airstrike on Iran on Friday, causing the nation to retaliate in a move that stoked fears of a potential nuclear conflict. Traders were however encouraged by a Wall Street Journal report stating that Iran is willinging to de-escalate if the United States does not join Israel in further attacks.
RBC Capital Markets strategist Lori Calvasina wrote in a Sunday note that the conflict comes at a "complicated time" for the U.S. stock market.
"Two key risk factors for equities have come into focus for us: their view that the conflict could take some time to play our and the risk that it evolves into a broader, regional conflict," Calvasina wrote, added that the conflict would become more "problematic" for Wall Street the broader and longer it lasts.
Oil prices initially soared following Israel's attack and later eased alongside with the tensions. West Texas Intermediate crude futures declined more than 1% on Monday to $71.77 a barrel after climbing above $77 overnight. Stocks also came off of a losing week, with the Dow closing down more than 1%, while the S&P 500 and Nasdaq lost 0.4% and 0.6%, respectively.
On the economic front, New York regional factory activity contracted further in June, according to a New York Federal Reserve survey released Monday. The month's reading was -16, representing the percentage difference between companies reporting expansion versus contraction, marking the fourth consecutive month of negative readings.
Offering a bright spot beneath the headline, however, the survey's general business conditions reading rose to 21.2 in June from May's -2, signaling that managers are growing more optimistic towards the prospects of future growth after the initial shocks of President Donald Trump's trade policies.
For corporate news, Roku (NASDAQ: ROKU) announced a new ads partnership with Amazon (NASDAQ: AMZN) that will open advertisers to an estimated 80 million Connected TV (CTV) households in the U.S. Early tests of Roku's integration with Amazon DSP have shown advertisers reaching 40% more unique viewers with the same budget and reduced how often the same household saw an ad by nearly 30%, according to the release.
"The collaboration enables agencies and brands that use Amazon DSP to benefit from greater efficiency and higher performance," said Paul Kota, senior vice president of Amazon Ads, in a statement. "By combining our technologies, advertisers can now drive full-funnel campaign outcomes -- from awareness through conversion -- while eliminating media waste across Amazon and Roku streaming audiences."
Meta Platforms (NASDAQ: META) also updated the way it advertises on Monday, now bringing ads to WhatsApp after acquiring the messaging app 11 years ago. The social media giant said businesses will now be able to run "status ads" on WhatsApp that prompt users to interact, with the ads only being showed in the app's "Updates" tab. Meta will also begin monetizing WhatsApp's Channels feature through search ads and subscriptions.
Looking ahead, market participants widely expect the Fed to hold interest rates steady on Wednesday, even as Trump has pressured Fed Chair Jerome Powell in recent weeks to deliver a cut. The holiday-shortened week also hosts the latest reports for the retail sector and housing market.