Stocks rebound as oil prices tumble and Iran proposes Strait of Hormuz reopening

U.S. equities rose on Monday, recovering part of the losses sustained during a volatile week that saw sharp declines in technology and artificial intelligence sectors. The S&P 500 index climbed 0.8%, ending a streak of three consecutive losing weeks and moving within 2.3% of its all-time record. The Dow Jones Industrial Average gained 547 points, or 1.1%, by 10:15 a.m. Eastern time, while the Nasdaq composite increased by 1%.

A primary driver for the market’s improvement was a sharp drop in crude oil prices. Brent crude, the international benchmark, fell 6.7% to settle at $105.87 per barrel. This decline followed announcements from Iran stating it has a two-day plan to reopen the Strait of Hormuz, a critical chokepoint for global energy trade. Tehran also indicated it will resume nuclear negotiations with the United States. Iran’s top diplomat expressed hope for "rationality" from the U.S. side as diplomatic efforts aim to prevent a return to full-scale war.

Oil prices have fluctuated widely since the conflict with Iran began, oscillating between roughly $70 and $120 per barrel. The market’s reaction to geopolitical news has been swift and volatile. In parallel, shares in the AI sector have remained unstable for months amid growing skepticism that the hundreds of billions of dollars invested by Big Tech firms will yield sufficient productivity to justify the spending.

Recent earnings reports from major technology companies have fueled these concerns. Alphabet, the parent company of Google, reported slower-than-expected growth in its search business and consumed more cash during the quarter than anticipated. Despite posting its worst single-day drop in history on Thursday with a decline of more than 12%, Alphabet shares rose 2.4% on Monday. Nvidia, which lost its status as the most valuable stock on Wall Street to Apple after a 4.2% drop on Friday, saw its shares climb 1.9% on Monday.

Non-technology firms also contributed to the market’s upward movement following stronger than expected third-quarter earnings. Marriott International shares jumped 4.3% after the hotel chain reported global strength. CEO Anthony Capuano noted that trends in the Middle East, despite the ongoing war, improved meaningfully compared to the spring. Idexx Laboratories, a provider of diagnostic equipment for veterinarians, surged 16.3% after beating analyst estimates for profit and revenue while raising its full-year 2026 forecasts.

The lower cost of fuel benefited airlines and cruise lines. United Airlines stock rose 6.5%, Southwest Airlines climbed 4.2%, and Carnival increased 4.6%. These gains helped counterbalance the impact of Marvell Technology, which fell 6% after announcing a deal to acquire Lumentum. Marvell will exchange 4.5 of its shares for each Lumentum share, valuing the transaction at approximately $115 billion. Lumentum shares dropped 10.6% following the announcement.

Economic data released on Monday suggested that U.S. manufacturing growth exceeded economist expectations. Additionally, an inflation measure from the Institute for Supply Management indicated that prices are rising at a slower pace. In global markets, European indexes showed mixed results with modest movement. Asian markets experienced larger swings, with South Korea’s Kospi index jumping 2.2% on tech strength. Chinese indexes in Shanghai and Hong Kong rose 1.1% and 0.4% respectively, recovering from recent losses. The People’s Bank of China stated that a new program deploying approximately 100 billion yuan, or $15 billion, would support the market.