Stocks rallied after President Donald Trump said the U.S. and Iran have held talks and that he was halting strikes on Iranian power plants and energy infrastructure, giving investors hope that the Middle East conflict that spiked oil prices and raised fears of a global recession was nearing an end.

The Dow Jones Industrial Average
jumped 905 points, or 2%. The S&P 500
rose 1.9%, while the Nasdaq Composite
gained 2.2%. Before Trump’s comments, futures were pointing to more losses for equity markets under siege from skyrocketing oil prices and uncertainty about the duration of the Iran conflict. But after Trump’s comments, Dow futures briefly surged more than 1,000 points.

Crude prices dropped after Trump’s post with West Texas Intermediate futures
falling more than 9% to around $88 a barrel. International benchmark Brent
fell more than 10% to $100 a barrel.

“I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East,” wrote Trump in a Truth Social post.

“Based on the tenor and tone of these in depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the Department of War to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions,” the president added.

Stock futures were off their highest levels of the session after Iranian state media said there were no direct talks between the U.S. and Iran.

Trump’s announcement came as the Iran war entered its fifth week, with tensions escalating over the weekend on an ultimatum from the president. Trump had threatened an attack on Iranian power plants in 48 hours if the Strait of Hormuz — a key shipping route for oil and other energy products — wasn’t reopened. Iran in turn said it would target U.S. infrastructure, including energy and desalination facilities ​in the Gulf, if the U.S. carried out its threat.

“Equity markets finally found an off-ramp to the dramatic uncertainty and significantly oversold conditions due to the Iranian conflict,” wrote Jeff Kilburg, founder and CEO of KKM Financial and manager of the Essential 40 Stock ETF (ESN). “If this proves to be a foundation for peace in the Middle East, equities could get back to all-time highs.”

Before Monday’s rebound, the Dow and Nasdaq Composite were each threatening to fall into correction territory — a 10% pullback — with both down around 9.8% from their record levels through Friday. The S&P 500 was off by 7% from its high before Monday’s turnaround.

It was a broad rebound during the session, with cyclical shares like banks and industrials surging as well as technology shares. JPMorgan Chase
climbed more than 2%, while Morgan Stanley
was 3% higher. Caterpillar
added 3%, while Deere
climbed 1%. Nvidia
and Apple
were both higher by 2%. Airline stocks such as Delta Air Lines
and United Airlines
were up 3% and 4%, respectively, as the price of oil slid.

The Dow and Nasdaq fell around 2% each last week, while the S&P 500 lost 1.5% as the Iran conflict continued to drag down markets. For the Dow, it was the first four-week losing streak since 2023.

“The market has been desperate for any good news, and this appears to be, at least on the surface, the best news we can expect,” said Art Hogan, chief market strategist at B. Riley Wealth Management. “If we were able to see any downward pressure on energy prices, the market is like a coiled spring looking for a reason to move higher.”

Credit: — CNBC’s Fred Imbert contributing reporting.