By Antonio Di Giacomo, Senior Market Analyst at XS.com
Wall Street managed to sharply reverse the losses recorded at the start of Monday’s session, despite the significant deterioration in sentiment triggered by U.S. airstrikes against Iran over the weekend. The S&P 500 climbed back toward the 6,880 level after falling more than 1.5% at the open, while the Nasdaq regained ground above 25,000 after retreating over 1%. Meanwhile, the Dow Jones Industrial Average hovered near 49,000, reflecting a broad and coordinated recovery.
The conflict intensified following coordinated attacks by the United States and Israel on strategic targets in Iran, resulting in hundreds of casualties, including Supreme Leader Ali Khamenei. Iran’s response, launching offensives aimed at Israel and other Gulf countries, significantly raised regional tensions and increased the risk of a wider confrontation in the Middle East.
President Donald Trump stated that military operations will continue until all strategic objectives are achieved, while the Secretary of Defense emphasized efforts to neutralize missile and nuclear threats. Iran, for its part, ruled out further negotiations with Washington, hardening its stance after the collapse of recent talks regarding its nuclear program.
Despite the initial uncertainty, investors chose to rebuild equity positions, focusing on corporate fundamentals and medium-term economic expectations. The swift recovery in major indices suggests that, for now, the market views the conflict as a relevant geopolitical risk but one that remains financially contained in the immediate term.
The S&P 500 continues to trade near record highs, maintaining its medium-term bullish structure. Technically, the 6,800 level has consolidated as a key support after absorbing early selling pressure. The index’s ability to sustain elevated levels amid heightened tensions reinforces the perception of the structural strength of the U.S.market.
The Nasdaq, more sensitive to shifts in risk appetite, showed a particularly strong rebound. After hitting intraday lows with losses exceeding 1%, the tech-heavy index fully reversed the move and once again holds above 25,000, signaling that demand for growth assets remains intact.
At the same time, the Dow Jones Industrial Average remains near 49,000, indicating a balanced internal rotation between defensive and cyclical sectors. This stability suggests that institutional investors have not significantly reduced their equity exposure despite the rise in volatility.
Markets have repeatedly demonstrated that geopolitical episodes tend to generate immediate spikes in volatility but rarely alter structural trends unless they directlyaffect economic fundamentals. In this case, the initial reaction quickly gave way to a technical recovery supported by liquidity conditions and strategic positioning.
In conclusion, the session made clear that even amid a high-profile military escalation, Wall Street remains notably resilient. As long as major indices remain near their highs and absorb volatility without breaking key support levels, the prevailing trend is likely to remain constructive. The focus now shifts to the evolution of the conflict and whether it spills over from the geopolitical sphere into the economic landscape, something the market has not yet fully priced in.