U.S. stocks opened with mixed performance on Monday evening, Beijing time, as escalating tensions in the Middle East drove oil prices higher, intensifying concerns over regional instability. Investors are looking ahead to the non-farm payrolls report due later in the week.
The Dow Jones Industrial Average fell by 176.76 points, or 0.36%, to 49,322.51. The S&P 500 dropped 8.37 points, or 0.12%, to 7,221.75, while the Nasdaq Composite edged up 5.486 points, or 0.02%, to 25,119.929.
Middle East developments remained a key focus. Conflicting reports emerged regarding Iran's claim of an attack on a U.S. vessel in the Strait of Hormuz, though U.S. military officials denied the incident.
Additionally, Iranian media reported that a ship had been turned away from the Strait of Hormuz. Iran's navy stated it had prevented "American-Zionist" warships from entering the area, while another unverified report suggested missiles struck a U.S. vessel near Jask Island after it ignored warnings. The U.S. Central Command later posted on social media platform X that no American naval ships had been attacked.
Oil prices surged broadly on Monday. U.S. West Texas Intermediate crude futures climbed 3%, trading above $105 per barrel, while the global benchmark Brent crude also rose 3%, surpassing $111. Energy prices later retreated from earlier highs following skepticism over the Iranian reports.
In a Truth Social post on Sunday, former U.S. President Donald Trump announced a "Freedom Plan," stating it would assist in "liberating" cargo ships from countries not involved in Middle East conflicts but stranded due to the Strait of Hormuz closure. Trump indicated the initiative would begin on Monday, though details on its execution were not provided.
Trump's announcement came after Iran confirmed on Sunday that it had received a U.S. response to its latest peace negotiation proposal. Earlier reports indicated Iran had submitted an updated peace offer via Pakistani mediators on Friday, boosting investor optimism toward a potential resolution with the U.S. However, Trump later expressed dissatisfaction with Tehran's proposal, describing it as an offer made only because "their military has run out."
Recent investor optimism regarding Middle East developments, combined with a strong first-quarter earnings season, has propelled stock markets to new highs. Nigel Tupper, a strategist at Bank of America, maintains a bullish outlook, citing a robust global earnings cycle and persistent investment themes.
Chris Senyek, Chief Investment Strategist at Wolfe Research, emphasized that strong earnings from the "Tech Seven" will keep artificial intelligence as the dominant market theme. He noted that solid results from major tech firms have added momentum to the AI narrative, likely encouraging continued investment in established tech leaders such as semiconductors and memory sectors.
On Friday, both the S&P 500 and Nasdaq Composite reached new intraday and closing record highs. The broader market index rose 0.29%, while the tech-heavy Nasdaq gained 0.89%. In contrast, the Dow declined by 152.87 points, or 0.31%.
The week's most significant economic data release will be the April jobs report, scheduled for Friday at 8:30 a.m. ET. According to Dow Jones consensus estimates, the U.S. economy is projected to have added just 53,000 jobs in April, significantly lower than the previous surge of 178,000, while the unemployment rate is expected to remain at 4.3%.
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