US stocks surged on Monday, shaking off earlier losses as President Trump eased fears of an escalation in the Middle East war by postponing threatened strikes on Iran's power plants.

The Dow Jones Industrial Average (^DJI) rose 1.6%, or over 700 points, paring gains from a 1,000-point advance earlier. The S&P 500 (^GSPC) and tech-heavy Nasdaq Composite (^IXIC) both jumped around 1.3% and 1.4%, respectively.

Markets became upbeat after Trump said he gave instructions to postpone military strikes on Iran's energy infrastructure, thanks to "very good and productive" talks between the US and Tehran that will continue throughout the week.

That eased market fears stoked by an intensifying exchange of violent rhetoric over the weekend. Trump gave Iran an ultimatum on Saturday, saying that if the Strait of Hormuz remained closed after 48 hours, he would order attacks on Iran's power facilities. On Monday, Tehran launched fresh attacks in the region.

Oil prices dived after Trump's post, pulling back from early morning gains. West Texas Intermediate (CL=F) crude futures sank around 7% to trade at around $90 a barrel, while global benchmark Brent (BZ=F) crude pulled back to around $102 after topping $113 during earlier trading.

Meanwhile, gold (GC=F) futures continued to trade lower but pared losses. The traditional haven asset erased all its 2026 gains earlier Monday amid concerns that rising inflationary pressures could prompt the Fed to hold off on interest rate cuts.

Vertiv (VRT), Lumentum (LITE), Coherent (COHR), and EchoStar (SATS) stocks all jumped more than 2% premarket after joining the S&P 500 index (^GSPC) before trading began on Monday, continuing a theme of AI concentration in the benchmark index.

The four companies — which operate in the data center, optical networking, and satellite communications space — replaced Match Group (MTCH), Molina Healthcare (MOH), Lamb Weston Holdings (LW), and Paycom Software (PAYC) on the index as part of the S&P's quarterly rebalancing.

The S&P 500 undergoes a quarterly rebalancing to ensure its composition reflects the current market and the 500 largest publicly traded companies. The rebalancing can influence stock prices in the short term through the \\"index effect,\\" but these effects are usually minimal over the long run.

Vertiv, Lumentum, and Coherent have seen particularly large run-ups year to date, with their stocks rising 37% (Coherent) to 91% (Lumentum) since the beginning of the year. All three companies have partnerships with Nvidia (NVDA) — the AI leader that makes up about 7% of the S&P 500's valuation.

These three, along with satellite communications provider EchoStar, highlight the growing tilt in the market toward the artificial intelligence theme.

Stock futures surged, and energy futures tumbled after President Trump said early Monday that strikes on Iranian energy targets would be paused while the US and Iran engage in talks.

Markets betting that Trump chooses to deescalate the war in Iran from here is a militarized version of the trade-related TACO trade (betting \\"Trump Always Chickens Out\\") that became so popular among investors last summer. This time around, however, investors don't seem to have as much faith in the TACO thesis, with a good chunk of Monday's knee-jerk move having already been given up.

Take oil futures — the price of WTI crude oil fell from around $100 a barrel to closer to $86 almost instantly on these headlines. An hour later, we're back at $92.

Stock futures surged as much as 2.5% following Trump's comments. Near 8:20 a.m. ET, stock futures were up closer to 1.4%.

Trump turning down the temperature on US military action in the Middle East is positive for markets, but the message from last week that will take more than one post on Truth Social to shake is that the economic consequences of Trump's war in Iran will be greater than nothing.

Stock futures jumped after President Trump said he instructed the Department of Defense to postpone military strikes against Iranian power and energy infrastructure for five days while the US and Iran engage in talks.

The president posted on Truth Social that the two sides have been engaged in \\"very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East.\\" Over the weekend, Trump issued an ultimatum to the Iranians, telling them via social media that if they didn't reopen the Strait of Hormuz by Monday evening, the US would \\"obliterate their various power plants.\\"

Futures on the Dow (YM=F), S&P 500 (ES=F), and Nasdaq 100 (NQ=F) shot higher following the post, suggesting an off-ramp to the fighting, while WTI (CL=F) and Brent (BZ=F) crude oil prices dropped about $8 per barrel instantly to trade at $90 and $99 a barrel, respectively.

Bloomberg reports:

Goldman Sachs Group Inc. raised its oil price forecasts for 2026 due to the prolonged disruption of flows through the Strait of Hormuz, which it described as the largest-ever supply shock for the global crude market.

Brent (BZ=F) is expected to average $85 a barrel in 2026, up from an earlier forecast of $77, analysts including Daan Struyven said in a note. The full-year outlook for West Texas Intermediate (CL=F) was hiked to $79 from $72, they said.

The revisions rested in part on an assumption that flows through Hormuz would remain at only 5% of normal levels for six weeks, followed by a one-month recovery, they said in the note dated March 22. Over time, that stands to result in cumulative losses of just over 800 million barrels, the bank estimated.

... Echoing Goldman Sachs’ appraisal of the severity of the challenge for global energy markets, International Energy Agency Executive Director Fatih Birol told a media event in Canberra, Australia, on Monday that the effect of the current disruptions was equivalent to the two major oil crises in the 1970s, and the 2022 natural gas crisis after Russia invaded Ukraine, “all put together.”

Read more here.

From Bloomberg:

The specter of stagflation caused by the Iran war has wiped out more than $2.5 trillion from the value of global bonds in March, on track for the biggest monthly loss in more than three years.

Bonds are tumbling as a surge in oil prices quickens inflation, which erodes the value of the fixed payments from debt. While the slide in bonds’ market value is less than the roughly $11.5 trillion lost in global equities, it’s perhaps more unexpected as debt typically gains in times of geopolitical turmoil.

“Markets are beginning to price what I think is going to be a stagflationary impulse manifested very soon,” Kathryn Rooney Vera, chief market strategist at StoneX Group Inc., said in an interview on Bloomberg Television. “The longer this goes on, the higher oil prices can rise.”

Read more here.

Bloomberg reports:

Oil gained from the highest close since mid-2022, as investors assessed President Donald Trump’s two-day ultimatum to Iran to reopen the Strait of Hormuz and Tehran’s threat of reprisals.

Brent rose above $113 a barrel, up for a fifth day, while West Texas Intermediate was near $100. Trump said Iran must “fully open” the waterway within 48 hours, or have its power plants bombed. Tehran warned it would attack key infrastructure across the Middle East if Trump followed through.

Global benchmark Brent has surged by more than 50% since the strikes by the US and Israel on Iran began in late February. The conflict has shown no signs of abating, with key petroleum-product markets rallying even harder than crude. That’s threatened to unleash a wave of global inflation, bringing turmoil to financial markets from commodities to stocks and bonds.

“Now with this 48-hour deadline, Trump has posted himself into a corner,” said Rory Johnston, oil market researcher and founder of Commodity Context Corp. “It is highly unlikely that Tehran will agree to Trump’s terms on such an accelerated timeline under the threat of attack. And Iran is clearly able and willing to match any escalation.”

Read more here.

Yahoo Finance's Ines Ferré reports:

Gold (GC=F) futures fell roughly 4% Sunday night, poised to erase 2026 gains as the precious metal has shifted from a strong momentum trade earlier this year, to a losing bet amid the Middle East conflict.

Spot gold tumbled to about $4,372 per ounce, following a more than 10% decline last week, its worst weekly performance since 1983.

“This is an extremely brutal flush,\\" said Greg Shearer, head of base and precious metals strategy at JPMorgan on Friday.

\\"But from our perspective, what it's telling us is more about gold getting caught up in a contagion risk of a sell everything trade,\\" he added.

Gold and other precious metals have been in sell-off mode as surging oil prices stemming from the Middle East conflict have boosted inflation expectations and fueled concerns that the Federal Reserve and other central banks may not cut rates this year. In Europe, which relies heavily on oil imports, officials have floated the possibility of a rate hike.

Read more here.

Oil traded slight below last week's closing prices at the start of futures trading on Sunday, with roughly 24 hours to go on President Trump's 48-hour ultimatum to Iran.

Futures prices on Brent crude (BZ=F), the international pricing benchmark, initially surged but quickly gave up gains in the minutes after the open on Sunday, trading around $106 per barrel. Those on US benchmark West Texas Intermediate crude (CL=F) changed hands around $97.90 per barrel.

In a post on Truth Social at 6:45 p.m. ET on Saturday, President Trump said Iran had 48 hours to \\"FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz,\\" or else \\"within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!\\"

The threat by the US president comes after a week of attacks by the Iranian regime against energy infrastructure throughout the Gulf, including Qatar's Ras Laffan LNG export terminal — the world's largest such facility.

In a note to clients on Sunday evening, Goldman Sachs' oil desk, led by head of oil research Daan Struyven, raised its price targets for oil, now looking for Brent to trade at $110 per barrel through March and April, up from a previous call for $98 per barrel over the same timeframe under the assumption that \\"Hormuz flows remain at only 5% of normal levels for a longer 6-week period before a gradual 1-month recovery.\\"

The bank is now assuming an average 2026 price of $85 and $79 per barrel, respectively, for Brent and WTI, up from previous estimate of $77 and $72 per barrel for the two benchmarks. In 2027, Goldman expects Brent and WTI to average $80 and $75 per barrel, respectively.

\\"In the short-run, the market is likely to require a growing risk premium to generate precautionary demand destruction to hedge against shortages in longer disruptions risk scenarios,\\" Goldman's Struyven, Yulia Grigsby, and Alexandra Paulus wrote.

\\"A recognition of the risks from the high concentration of production and spare capacity is likely to lead to structurally higher strategic stockpiling and long-dated prices.\\"