Stocks Hit Records, Oil Jumps 3% as Iran Talks Stall
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- S&P 500 and Nasdaq Composite both closed at record highs on Monday, rising 0.19% to 7,412.84 and 0.10% to 26,274.13 respectively, while the Dow gained 95.31 points (0.19%) to 49,704.47.
- Trump declared the U.S. ceasefire with Iran 'on life support' and dismissed Tehran's response to a peace proposal as 'stupid,' stoking concerns the 10-week conflict would drag on and paralyze shipping through the Strait of Hormuz.
- Oil prices surged nearly 3% on the stalemate — U.S. crude settled up 2.78% ($2.65) at $98.07 a barrel and Brent rose 2.88% ($2.92) to $104.21 per barrel as the Strait of Hormuz remained largely closed with no clear end to the war in sight.
- Iran's response to the U.S. peace proposal demanded compensation for war damage, emphasized Tehran's sovereignty over the Strait of Hormuz, and called for an end to the U.S. naval blockade, guarantees against further attacks, lifted sanctions, and a removal of the ban on Iranian oil sales.
- U.S. Treasury yields rose as climbing oil prices stoked inflation worries — the benchmark 10-year yield added 4.6 bps to 4.41% and the 2-year note climbed 5.9 bps to 3.952%.
- Gold reversed course to rise 0.44% to $4,735.39 an ounce in volatile trading as investors weighed the diplomatic stalemate and awaited key U.S. inflation data later this week.
- Investors are watching Trump and Xi Jinping's first face-to-face talks in more than six months, with Wells Fargo's Scott Wren citing cautious optimism that China could use its influence to help resolve the Strait of Hormuz crisis.
Why it matters: Brent above $104 and U.S. crude at $98 are direct hits to consumer energy costs, and the 10-year Treasury yield's jump to 4.41% shows bond markets pricing in fresh inflation pressure from the supply shock — complicating the Fed's rate path just as a key CPI print looms. The Trump-Xi meeting is the market's deus ex machina: if China pressures Tehran to reopen the Strait, oil's 3% premium unwinds fast; if not, the war premium extends and equity records look shakier.
