US stock market today: Dow, S&P 500, and Nasdaq rebound as Israel-Iran tensions ease and investors eye Fed decision

US stock market jumps as Dow rallies 500 points as Israel-Iran tensions ease, oil prices drop: What it means for investors and markets- Dow rallies 500 points as investors show renewed confidence amid hopes that the Israel-Iran conflict will remain limited. After days of tension, a report signaling Iran’s willingness to ease hostilities pushed markets up and oil prices down. The S&P 500 and Nasdaq also gained 1.2% and 1.5% respectively, while WTI crude oil fell over 1% to $72.22 a barrel. As geopolitical uncertainty continues, all eyes remain on energy prices, Fed policy, and global market reactions. This live market update breaks down what’s moving and why it matters.

How are U.S. stock futures performing right now?

All three major indexes are showing gains in mid-day trading:

• Dow Jones Industrial Average (via DIA ETF):
  Trading around $428.07, up +1.2% on the day
  (Intraday high: $428.17, low: $424.19)
• S&P 500 (via SPY ETF):
  Currently at $604.15, up +1.2%
  (High: $604.36, low: $599.07)
• Nasdaq 100 (via QQQ ETF):
  Up to $534.70, gaining +1.45%
  (High: $535.00, low: $526.92)

These numbers suggest a strong bounce from Friday’s losses, with broad participation across sectors.

What happened in the stock market last week?

All three major indexes closed lower on Friday, snapping a two-week winning streak:

• The Dow Jones plunged 565 points, or 1.3% — marking its worst one-day loss since May 21
• The S&P 500 slipped 0.4%
• The Nasdaq Composite declined 0.6%

It was a tough end to an otherwise bullish June as investors locked in gains and weighed economic uncertainties.

Where do the major indexes stand year-to-date?

Despite recent turbulence, here’s how the indexes are holding up in 2025 so far:

The Dow remains slightly in the red for the year, while the S&P 500 and Nasdaq are still managing modest gains.

What’s pushing the market higher today?

Several key drivers are fueling Monday’s rally:

1. Middle East tensions cool down
   Fresh updates suggest Israel and Iran may be backing off from further military escalation, easing global risk sentiment.
2. Oil prices drop
   Crude oil prices fell back toward the $69–$72 range, which calms inflation fears and supports equities.
3. Investors gear up for Fed policy meeting
   The Federal Reserve’s two-day meeting kicks off Tuesday, with a decision expected Wednesday. While no rate cut is expected, traders are closely watching Fed Chair Jerome Powell’s comments and the latest economic projections.
4. Big tech rallies
   Mega-cap stocks are leading the way:
   • Nvidia, Tesla, Palantir, and other tech names are climbing between 1% and 2%.
   • This momentum is helping push the Nasdaq higher after last week’s dip.

Market performance overview

Data reflects midday levels as of June 16, 2025.

What’s driving the market this week?

Several major factors are making investors cautious:

• Middle East conflict: Fresh clashes between Israel and Iran have reignited fears of regional escalation.
• Economic policy uncertainty: Lingering inflation, sluggish data, and global trade tensions — especially with China — are creating a foggy outlook.
• Spiking volatility: The Economic Policy Uncertainty Index hit record levels, raising the risk of reduced consumer spending and slower business investment.

Why did the Dow rally 500 points after last week’s plunge?

On Monday, the Dow Jones Industrial Average surged 494 points, or 1.2%, recovering sharply from Friday’s sell-off. Investors appeared more optimistic after a report by the Wall Street Journal revealed that Iran may be open to negotiations — under the condition that the U.S. stays out of Israel’s military actions. The S&P 500 also rose 1.2%, and the Nasdaq Composite led gains with a 1.5% jump.

Last Friday, markets dropped steeply amid fears of a broader regional war. The Dow had fallen over 700 points, and the week ended with the index down 1.3%. The S&P 500 and Nasdaq were down 0.4% and 0.6% for the week, respectively.

But Monday brought a wave of cautious optimism as the market digested signs that the Israel-Iran conflict may not spiral further.

Is the oil market calming down after the initial shock?

Oil prices, which had jumped dramatically following Israel’s Friday strike on Iran, cooled down on Monday. WTI crude futures fell more than 1%, settling at $72.22 per barrel — a significant drop from the $77 peak seen during overnight trading.

Traders have been laser-focused on developments in the Middle East, especially as Iran and Israel exchanged retaliatory strikes. On Monday, however, the tone shifted slightly, with reports suggesting both sides could contain the conflict. Still, the situation remains volatile.

Iran has threatened to shut down the Strait of Hormuz, a critical channel for the global oil supply, while Israel claimed to have gained “aerial superiority” over Iranian airspace. Both moves, if pursued further, could send energy prices soaring again.

How are tech stocks and the “Magnificent Seven” reacting?

The drop in oil prices helped restore risk appetite, especially in major growth names. Shares of Tesla gained over 1%, while Meta Platforms rose around 3%. Other stocks seen as beneficiaries of conflict-driven demand, like Palantir, climbed more than 3%.

Investors appear to be shifting back into high-growth tech stocks — often called the “Magnificent Seven” — after briefly pulling out due to rising geopolitical tensions. Lower oil prices and hopes of a de-escalation helped drive this renewed interest.

Could the Israel-Iran conflict still impact global markets?

Although markets found some relief Monday, the broader Israel-Iran conflict is far from resolved. As per Krishna Guha, vice chairman at Evercore ISI, the market is “taking comfort from the prospect that the conflict could stay in the limited war mode.”

But Guha warned in a client note that while containment is possible, “we continue to anticipate the conflict will last for a few weeks in the base case and still see elevated risk of escalation that envelops energy and draws in the U.S.”

Continued targeting of energy infrastructure could shake global supply chains and impact both inflation and market stability in the coming weeks.

Will the Federal Reserve respond with a rate cut amid global tensions?

As the market absorbs geopolitical developments, investors are also watching the Federal Reserve closely ahead of its interest rate decision on Wednesday.

Despite weak manufacturing data released Monday morning, Fed funds futures indicate a 100% probability the central bank will hold rates steady, according to CME Group’s FedWatch Tool.

President Donald Trump has recently increased pressure on Fed Chair Jerome Powell to cut rates. However, the recent spike in oil prices—even if temporary—adds inflationary pressure, reducing the chances that the Federal Reserve will pivot to easier monetary policy in the near term.

What’s on the calendar this week?

Here’s what traders are watching closely:

• Federal Reserve decision on interest rates coming Wednesday
  (Expect a rate pause, but commentary from Fed Chair Jerome Powell will be critical)
• Updated economic projections from the Fed will also be released midweek
• Juneteenth holiday: U.S. markets will be closed Thursday, June 19

This Fed week could set the tone for markets going into summer, especially with uncertainty mounting across global and domestic fronts.

What should investors watch next?

As the Middle East conflict continues to unfold, markets remain highly sensitive to any signals from Iran, Israel, or U.S. officials. Meanwhile, economic data and Fed policy signals could drive the next move in stocks and commodities.

Key things to watch:

• Any escalation or de-escalation in military actions.
• Statements from U.S. officials or Iranian intermediaries.
• Movement in oil and gold prices.
• Fed’s rate decision and economic projections this week.

For now, markets are breathing a sigh of relief. But with the Strait of Hormuz on the radar and energy infrastructure under threat, the situation could still take a sharp turn.

After a sharp sell-off Friday, Wall Street is bouncing back to start the week. Calming geopolitical tensions, lower oil prices, and optimism ahead of the Fed meeting are giving investors a reason to step back into risk assets. All eyes now turn to Wednesday’s central bank update, which could shape market momentum heading into July.

FAQs:

Q1: Why did the Dow rally 500 points today?
The Dow jumped 500 points as hopes rose that the Israel-Iran conflict will remain limited.

Q2: How is the Israel-Iran conflict affecting oil prices?
Oil prices fell after signs that Israel-Iran tensions may not escalate further.