Wall Street breathes easy as Middle East tensions cool and tech stocks surge

2 minutes read

17 June 2025

Wall Street breathes easy as Middle East tensions cool and tech stocks surge

The opening bell rang with a sense of déjà vu. Just last week, Wall Street was rattled by headlines of missiles and market mayhem. The Dow dropped over 500 points in a single day, oil prices soared, and investors braced for the worst. But as Monday dawned, a different mood swept the trading floor: relief.

By midday, the Dow Jones was up nearly 500 points, the S&P 500 and Nasdaq were both climbing, and the fear that had gripped markets just days before seemed to melt away. What changed? The story of the day is one of geopolitical calm, falling oil prices, and a fresh wave of optimism for America’s tech giants.

Relief rally: Calm in the Middle East, confidence on Wall Street

Over the weekend, whispers of possible negotiations between Israel and Iran began to circulate. Reports suggested that Iran might be open to talks, provided the US stayed out of Israel’s military actions. The threat of a wider regional war, which had sent oil prices and market volatility soaring, suddenly seemed less likely.

Chris Beauchamp, chief market analyst at IG, summed up the mood: “Friday’s wave of volatility has given way to a rebound in risk appetite, with investors breathing a sigh of relief as the Middle East conflict remains contained for now. This might seem overly optimistic, given the potential risk of the war escalating into a new and far more dangerous phase. The relief in equities was bolstered by reports that Tehran was seeking to end hostilities, perhaps a sign that Israel’s ‘shock and awe’ campaign has had a real impact in the corridors of Iranian power.”

Oil prices, which had spiked as high as $77 a barrel last week, fell back towards $72. Lower energy costs eased fears of runaway inflation, giving investors another reason to buy. The Dow, S&P 500, and Nasdaq each gained over 1% by midday. Line graph showing the percentage change of Dow Jones, Nasdaq, and S&P 500 indexes during the relief rally, from midday to session high.

Tech leads the rebound as Fed meeting looms

While geopolitical calm set the stage, it was America’s tech titans that stole the show. Shares of Nvidia, Tesla, and Palantir rallied between 1% and 2%, powering the Nasdaq to a 1.5% gain and helping erase last week’s losses. This surge was more than just a relief rally—it was a sign that investors are betting on technology to drive future growth, even as global uncertainty lingers.

Meanwhile, all eyes turned to the Federal Reserve’s two-day meeting. The consensus? No interest rate cut is expected this week, but every word from Fed Chair Jerome Powell will be scrutinised for hints about the path ahead. As Barclays strategists noted: “We foresee the median participant adopting a more stagflationary outlook following the tariff surprises in April, despite the easing of financial conditions due to a weaker dollar, with rising inflation and reduced GDP growth projections for 2025. The dot plot is expected to indicate postponed rate cuts, with only one expected this year and three in 2026.”

Investors are also watching key economic data—retail sales, import prices, and jobless claims—for signs of strength or weakness in the US economy. For now, the market’s message is clear: as long as global tensions cool and the Fed stays patient, the bulls are back in charge.

The story of the day is a reminder of how quickly sentiment can shift on Wall Street. Just a few days ago, fear ruled the markets. Today, hope has the upper hand. Whether this optimism lasts will depend on the next headline, the next Fed decision, and the resilience of the world’s most-watched economy.

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.