U.S. stock index futures rose strongly on Monday after President Donald Trump said planned military strikes on Iranian power facilities would be postponed, triggering a broad relief rally across global risk assets. Dow E-minis gained about 2.48%, S&P 500 E-minis climbed roughly 2.36%, and Nasdaq 100 futures advanced around 2.4% in early trading, according to Reuters.
The rebound followed several sessions of heavy pressure on equities as investors had priced in the risk of a deeper escalation in the Middle East, higher oil prices and a more difficult inflation outlook. Monday’s move suggested traders were willing to buy back risk quickly once the immediate threat of a direct strike on Iranian infrastructure was reduced.
Trump’s decision shifts the tone
The immediate catalyst for the rally was Trump’s decision to postpone military action after what he described as productive discussions with Tehran. That announcement eased concerns that the conflict could intensify into a direct attack on Iranian energy or utility assets, a scenario that had helped fuel market anxiety late last week.
For equity investors, the significance went beyond geopolitics alone. A strike on Iranian infrastructure had been seen as a potential trigger for another sharp move higher in crude oil, which in turn could have worsened inflation fears and made it harder for the Federal Reserve to turn more supportive later this year. With that near-term threat reduced, at least temporarily, markets responded with a classic relief move.
Oil prices tumble as risk premium unwinds
The reaction in oil was just as important as the rise in stock futures. Brent crude fell about 15% to an intraday low near $96 a barrel, while U.S. West Texas Intermediate dropped around 13.5% to roughly $85.28, Reuters reported.
That decline matters because oil had become the market’s central macro stress point. Rising crude prices were feeding concern that inflation could remain sticky even as growth expectations softened. By falling sharply on Monday, oil removed some of the immediate pressure on inflation expectations and helped improve the outlook for risk assets, especially rate-sensitive equities and consumer-facing sectors.
Nasdaq gains as growth stocks recover
The Nasdaq was among the main beneficiaries of the shift in sentiment. Technology and growth stocks tend to respond strongly when geopolitical tension eases and the market sees less risk of an energy-driven inflation shock. Monday’s advance in Nasdaq 100 futures suggested investors were moving back into the growth trade once the prospect of a sudden spike in oil became less immediate.
That said, the rebound does not necessarily mean investors have regained full confidence in the sector. Growth stocks remain especially sensitive to swings in inflation expectations and Treasury yields. If oil prices were to rebound sharply again, the Nasdaq could once more come under pressure as investors reassess the path for interest rates. That leaves the index highly exposed to further geopolitical headlines.
Dow and small caps point to a broader rally
The strength in Dow futures carried a slightly different signal. Because the Dow Jones Industrial Average includes more industrial, financial and cyclical companies, its rebound suggested the buying was not limited to high-growth names. Instead, investors appeared to be reassessing the broader economic fallout of a possible military escalation and concluding that the short-term threat had eased.
That interpretation was reinforced by the move in small caps. Reuters reported that Russell 2000 futures jumped about 4.7%, indicating a wider recovery in risk appetite. Smaller companies are often more sensitive to domestic growth expectations and tighter financial conditions, so their outperformance suggested the market was reacting not just to lower geopolitical stress but also to a less severe inflation-and-rates scenario.
Volatility eases, but caution remains
The Cboe Volatility Index fell back to around 22.79 after touching a two-week high, another sign that investors were unwinding some of the fear premium that had built up during the previous selloff. Lower volatility tends to support broader equity participation, particularly after markets have been shaken by geopolitical uncertainty.
Still, the fall in volatility should not be confused with a full return to calm. Reuters noted that Wall Street’s main indexes had already recorded four straight weekly declines, while the Russell 2000 had moved into correction territory on Friday. That context matters because Monday’s rebound came after a period of already stretched sentiment. In other words, the strength of the rally also reflected how aggressively investors had de-risked beforehand.
A relief rally, not a full reset
Seeking Alpha described the move in S&P 500, Nasdaq and Dow futures as a strong premarket rebound driven by the delay in military action and the corresponding drop in oil prices. That framing is broadly consistent with the wider market reaction: this was a relief rally built on the removal of an immediate downside scenario.
But relief is not the same as resolution. The conflict with Iran remains unresolved, and investors are still likely to react quickly to any sign that tensions are rising again. As long as that remains the case, equities will stay heavily influenced by geopolitical headlines, oil-market volatility and changing expectations for inflation and monetary policy.
Why oil still matters for stocks
Even after Monday’s sharp drop, energy markets are not signaling that risk has disappeared. Reuters separately reported that Goldman Sachs raised its 2026 average Brent crude forecast to $85 a barrel and warned that prices could move much higher under a more severe disruption scenario. That suggests the broader market is still operating in an environment where oil can quickly re-emerge as the dominant variable.
For the stock market, this matters because oil is no longer just an energy-sector story. It affects inflation expectations, consumer spending, transport costs, margins and the rate outlook all at once. That is why every swing in crude is now feeding directly into the outlook for the S&P 500, Nasdaq and Dow.
What investors should watch next
The next move in U.S. equities is likely to depend on whether the latest pullback in oil proves durable and whether geopolitical tensions continue to cool. If crude remains lower and no fresh escalation headlines emerge, the current rebound could extend, particularly in growth stocks, cyclicals and small caps.
If the geopolitical backdrop deteriorates again, however, markets could quickly reverse. The previous selloff showed how fast investors will reprice risk when oil spikes and inflation fears intensify. That makes this a market driven less by valuation and more by headline sensitivity in the near term.
Conclusion
Monday’s sharp rise in S&P 500, Nasdaq and Dow futures reflects a clear relief response after Trump delayed planned strikes on Iranian infrastructure and oil prices fell sharply. The move has improved market sentiment and reduced immediate inflation fears, at least for now. But this is still a fragile setup. The rally is built on a pause in escalation, not a lasting solution, which means U.S. equities are likely to remain highly reactive to any new developments in the Middle East and the oil market.
