Wall Street Climbs as Oil Tumbles, Goldman Downplays Iran Risk

U.S. stocks reversed early losses Monday and turned decisively higher in afternoon trading, shrugging off an Iranian missile strike on a U.S. base in Qatar and a sharp selloff in crude oil prices. The rebound came after a Goldman Sachs note calmed fears of a broader economic fallout, suggesting that energy disruptions would likely remain contained.

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As of 2:05 p.m. ET, the Dow Jones Industrial Average had gained 289.42 points, or 0.69%, to 42,946.20. The Nasdaq Composite rose 177.16 points, or 0.91%, to 19,624.60, while the S&P 500 climbed 43.76 points, or 0.73%, to 6,011.60. The small-cap Russell 2000 also posted gains, up 0.45% to 210.16, according to Finviz.

In contrast, oil prices plunged. West Texas Intermediate crude for August delivery dropped $4.27, or 5.78%, to $69.57 per barrel as of 1:54 p.m. ET, hitting its lowest level in weeks.

Markets Look Past Iran Strike

The reversal in equities came hours after reports that Iran had fired missiles at the U.S. Al-Udeid Air Base in Qatar. According to a senior regional source, Iran had alerted both the U.S. and Qatar hours before the strike. Qatar’s Foreign Minister Majed Al Ansari said the country’s air defenses intercepted the missiles and condemned the incident as a violation of its sovereignty.

The strike followed President Donald Trump’s confirmation of U.S. attacks on Iranian nuclear facilities over the weekend. Iranian President Masoud Pezeshkian said the U.S. "would not go unanswered,” while Supreme Leader Ali Khamenei called the strike a “grave mistake” and raised the threat of Iran withdrawing from the Nuclear Non-Proliferation Treaty.

Despite the geopolitical fireworks, the equity market’s rebound suggested traders were leaning into the idea that full-scale regional escalation remains unlikely—at least for now.

Oil Sinks as Goldman Sees Contained Risk

Crude oil’s steep drop caught many off guard given the high-stakes military developments. Analysts attributed the move to investor reassessment of supply disruption risks, especially after Goldman Sachs issued a report downplaying the broader macroeconomic impact of the conflict.

“Our commodities analysts maintain a baseline forecast that oil supply will not be disrupted and that strong supply growth outside U.S. shale will reduce Brent oil prices to around $60 by year-end,” wrote Goldman economists Joseph Briggs and Megan Peters in a Global Economics Comment published Monday.

The firm acknowledged upside risks if Iranian exports are halted or the Strait of Hormuz is obstructed, but noted such scenarios were unlikely. Goldman’s baseline model even sees easing energy prices delivering a modest 0.2 percentage point boost to global GDP and a 0.4 percentage point drag on inflation over the next year.

Investors Reposition on Goldman’s Outlook

The equity rally suggests investors may be taking Goldman’s view to heart. The note indicated that most countries have minimal trade exposure to the Middle East outside of energy and that financial conditions have historically not tightened significantly during past regional conflicts.

Additionally, volatility remained subdued, and money rotated into growth and tech sectors, as evidenced by the outperformance of the Nasdaq.

The plunge in oil prices also relieved pressure on inflation-sensitive sectors. “If the Goldman base case holds and oil keeps sliding, this could be a double tailwind for stocks—especially if core inflation remains muted,” one trader told Ainvest on condition of anonymity.

Outlook: Risks Linger, but Relief Rally Leads the Day

While Monday’s gains do not guarantee the end of geopolitical anxiety, investors appear willing—for now—to bet that diplomacy, deterrence, and air defenses will contain the worst of the fallout. Energy markets remain volatile, and the situation in the Strait of Hormuz continues to warrant close monitoring.

For the moment, however, Wall Street is rallying on falling oil and a tempered economic outlook, reminding markets once again that in geopolitics, perception often moves faster than missiles.