US stocks rose on Monday after a sharp selloff tied to the war in Iran pushed major indexes close to correction territory. The rebound came as investors weighed lower bond yields, firm earnings expectations, and comments from Federal Reserve Chair Jerome Powell on inflation. Oil prices stayed elevated, however, as the Middle East conflict continued to disrupt energy routes and keep markets on edge.

US Stocks Recover After Recent Selloff

US equities moved higher in late-morning New York trading, with the S&P 500 up 0.3% and the Dow Jones Industrial Average up 0.8%. The NASDAQ 100 was little changed, while the MSCI World Index rose 0.1%. In Europe, the Stoxx Europe 600 added 0.8%.

The gains followed a rout that left the S&P 500 near a technical correction. About 350 stocks in the index advanced as buyers returned after several sessions of losses. The S&P 500 was also on pace for its worst month since 2022, while the NASDAQ 100 remained about 11% below its October record.

Strategists pointed to signs that selling pressure may be easing. Morgan Stanley’s Michael Wilson said there is growing evidence that the recent equity decline “is getting closer to its ending stages.” Goldman Sachs traders also said heavy short selling by hedge funds and disposals by systematic investors could fuel a stronger rebound if tensions ease.

Powell Comments Support Bond Market

Treasuries gained as investors reassessed the Federal Reserve’s path after Powell said longer-term inflation expectations appear to be “well anchored beyond the short term.” He said officials may need to respond to effects from the conflict, but added that “it’s not the case yet.”

The yield on the 10-year US Treasury fell 10 basis points to 4.33%, marking its biggest drop since October. Germany’s 10-year yield declined six basis points to 3.03%, while Britain’s 10-year yield slipped four basis points to 4.93%. Traders also removed bets on further rate hikes and began pricing in a rate cut in 2026.

Powell also said the Fed still expects inflation to return to its 2% target. At the same time, he noted that the central bank has limited control over supply shocks such as the recent jump in oil prices. Those remarks helped support bonds even as crude remained above $100 a barrel.

Oil Surge Keeps Pressure on Global Markets

Commodity markets remained under pressure from the war in the Middle East. West Texas Intermediate crude rose 2.8% to $102.43 a barrel, and US crude topped $100 during the session. Brent crude also stayed elevated, reaching $115 a barrel at one stage. Spot gold climbed 0.8% to $4,529.02 an ounce.

The conflict has disrupted a major route for energy supplies and increased concern about slower growth and firmer inflation. President Donald Trump said the US is in “serious discussions” with Iran to end military operations, while also threatening to destroy the country’s energy assets if the Strait of Hormuz is not reopened. Treasury Secretary Scott Bessent said the administration is moving to address oil supply shortages and expressed optimism about reopening the shipping route.

Even so, market participants remained cautious. James McCann at Edward Jones said the Iran conflict continues to loom over the outlook, while Chris Senyek at Wolfe Research said markets remain driven by headlines around escalation and de-escalation.

Sectors and Companies Draw Attention

Large technology stocks rebounded after a steep drop last week. An equal-weight basket of the Magnificent Seven fell 4.9% last week, its biggest weekly decline since April 2025. Still, some analysts noted that the NASDAQ 100 now trades at about 21 times projected 12-month earnings, narrowing its valuation premium over the S&P 500.

Corporate Movers and Sector Watch

• Fannie Mae and Freddie Mac rose after Bill Ackman called both mortgage finance firms “stupidly cheap.”

• Sysco agreed to buy Jetro Restaurant Depot for $29.1 billion, including debt, in a major food-service deal.

• Biogen gained after US regulators approved a high-dose version of its drug for a rare muscle disorder.

• NASDAQ adopted a rule change that could allow large newly listed firms, including SpaceX, to enter its main index more quickly.

• Magnificent Seven stocks rebounded after the group posted its sharpest weekly drop since April 2025.

• Energy shares extended their advance and posted a 14th straight week of gains, the longest winning streak on record. 

Aluminum stocks also climbed after metal prices rose following attacks on Middle Eastern aluminum facilities. Meanwhile, healthcare stocks came into focus as US senators pressed the Trump administration to examine Medicare Advantage billing practices.

Also Read: Indian Stock Indices Stay Closed as Global Markets Remain Active