Stocks Open Higher Despite Geopolitical Tensions as Oil Slides Despite Risks

U.S. stocks edged higher at the open Monday as investors weighed geopolitical turmoil in the Middle East and mixed signals from global economic data, while crude oil prices fell sharply amid fears of disruption in the Strait of Hormuz.

At the opening bell, the Dow Jones Industrial Average climbed 231.87 points, or 0.55%, to 42,429.7. The Nasdaq Composite rose 187.34 points, or 0.97%, to 19,594.2, while the S&P 500 gained 40.72 points, or 0.68%, to 6,017.69.

The gains come despite ongoing conflict between Israel and Iran, which escalated over the weekend. Israeli forces announced they had destroyed more than one-third of Iran’s surface-to-surface missile launchers, in addition to strikes that killed top Iranian military leaders, including Hossein Salami and Mohammed Bagheri. Iran responded with ballistic missile and drone attacks, killing three Israelis and injuring dozens.

The geopolitical risks have heightened concerns over the security of oil transport through the Strait of Hormuz, a vital conduit for global energy supplies. Iran has reportedly begun reviewing the potential closure of the strait, prompting investor anxiety over possible supply shocks.

Yet, crude prices moved lower in early trading. July futures for U.S. benchmark crude dropped $1.00, or 1.37%, to $71.98 a barrel as of 9:07 a.m. ET. The decline suggests that traders may be unwinding risk premiums despite the escalating conflict, possibly pricing in muted short-term supply impacts.

Global diplomacy is in the spotlight as G7 leaders gather in Canada. The summit has taken a cautious tone, with world leaders aiming to avoid conflict with President Donald Trump. Unlike previous meetings, there is no joint statement planned, reflecting the administration’s preference for bilateral negotiations over multilateral consensus. Tariff tensions remain elevated, particularly with Japan and the EU, though talks are ongoing to resolve disputes, including auto and agricultural product tariffs.

Meanwhile, optimism over China’s economy provided a tailwind for equities. Chinese retail sales surged 6.4% in May—well above expectations—while industrial production remained steady, offering a much-needed boost to global sentiment. However, persistent deflation and weakness in the property sector tempered enthusiasm. Policymakers are expected to maintain a cautious stance on stimulus in the near term.

Despite regional instability and uneven economic signals, investor sentiment at the start of the week leaned positive. Traders appear to be balancing the risks from conflict and trade uncertainty against stronger-than-expected data from China and the relative resilience of U.S. equity markets.

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