US stock markets posted solid gains and oil prices saw a dramatic sell-off on Monday, June 23, 2025, as investors interpreted Iran’s retaliatory missile strike on a U.S. military base in Qatar as a sign that Middle East tensions might be easing rather than escalating. This unexpected market reaction followed a weekend of heightened anxiety after prior U.S. strikes against Iranian nuclear sites.
Wall Street largely shrugged off the military action, betting on a path towards de-escalation after the limited nature of Iran’s response became clear.
Market Indexes Rally
Major U.S. stock indexes finished the day near session highs:
The Dow Jones Industrial Average climbed 375 points, gaining 0.9%.
The S&P 500 advanced 1%, snapping a three-trading-day losing streak.
The Nasdaq Composite rallied 0.9%.
The S&P 500 is now roughly 2% off its February 19 record close. Looking ahead, some technical analysts remain optimistic. Rich Ross, Evercore ISI’s head of technical analysis, suggested an “‘All-time high by the 4th of July’ remains live,” citing July’s historical performance as often strong for equities.
Oil Prices Plunge
Conversely, crude oil futures plummeted as fears of a major supply disruption subsided.
Brent crude oil futures, the international benchmark, sank a significant 7.2% to $71.48 a barrel. This marked its largest one-day drop since July 5, 2022.
- WTI crude oil futures also fell sharply by 7.2%, settling at $68.51 a barrel, reaching its lowest price since June 12.
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This steep decline came after oil prices had initially spiked earlier in the day, with WTI briefly exceeding $77 per barrel amidst fears following the U.S. strikes. The subsequent reversal created a bearish engulfing pattern on the daily chart, with technical indicators suggesting downward momentum. Key support levels for WTI to watch include around $57 and potentially down to $44 if that level is breached, while resistance is seen near $77 and $93.
The energy sector broadly reflected this decline, with oil and gas exploration companies and oilfield services firms seeing shares drop alongside crude prices.
De-escalation Hopes Emerge
The primary driver behind the market’s reaction was the perceived limited scope of Iran’s attack. Iran’s Revolutionary Guard stated they attacked the Al-Udeid base in Qatar in “Operation Besharat Fatah.” However, Qatar’s Ministry of Defense confirmed they successfully intercepted the missiles, reporting no deaths or injuries.
U.S. President Donald Trump echoed this assessment, noting no Americans were harmed and “hardly any damage was done.” Crucially, he publicly thanked Iran for “giving us early notice,” which he suggested helped prevent casualties, and encouraged both Iran and Israel towards peace.
This outcome was widely seen as the “best case scenario.” Experts characterized Iran’s response as “very, very weak” and not intended to provoke further U.S. action. The relief stemmed from avoiding a significant escalation, particularly the major concern that Iran might attempt to close the Strait of Hormuz, a critical waterway for global oil shipments. U.S. Energy Secretary Chris Wright also downplayed the risk of this occurring.
Looking Ahead: Focus Shifts to the Fed
With geopolitical tensions momentarily easing, market focus is expected to shift back to monetary policy signals. The next significant event is Federal Reserve Chair Jerome Powell’s testimony before Congress scheduled for Tuesday and Wednesday.
Recent comments from Fed officials have added to the anticipation. Vice Chair Michelle Bowman stated she would support lowering interest rates as soon as July if inflation pressures remain contained, following similar remarks from Fed Governor Christopher Waller. Wall Street will be paying close attention to Powell’s testimony for any clues on the timing of potential rate cuts, particularly given repeated calls from President Trump for the central bank to ease policy.
Overall, Monday’s trading session demonstrated how quickly market sentiment can pivot based on evolving geopolitical dynamics and expectations around central bank actions.
