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Investing.com - U.S. stocks gained solidly on Monday, despite volatile trading, as Iran released a "very weak" response to the U.S. strikes on three Iranian nuclear sites over the weekend. Additionally, dovish interest rate commentary from Federal Reserve Governor Michelle Bowman contributed to the bid in stocks.
The benchmark S&P 500 closed up by 56 points, or 0.94%, the tech-heavy Nasdaq Composite lifted by 184 points, or 0.94%, and the 30-stock Dow Jones Industrial Average rose 375 points, or 0.89%.
Shortly before 1 PM ET, Tehran launched missile attacks at the U.S. airbase in Qatar. Iran reportedly coordinated the attack with Qatari officials, giving advanced notice to minimize casualties. Qatar reported no deaths from the attack. Other U.S. military bases in the region are on high alert.
Following the counterattack, Trump called the response from Iran "very weak."
"There have been 14 missiles fired — 13 were knocked down, and 1 was “set free,” because it was headed in a nonthreatening direction," Trump said. "I am pleased to report that NO Americans were harmed, and hardly any damage was done. Most importantly, they’ve gotten it all out of their “system,” and there will, hopefully, be no further HATE. I want to thank Iran for giving us early notice, which made it possible for no lives to be lost, and nobody to be injured. Perhaps Iran can now proceed to Peace and Harmony (JO:HARJ) in the Region, and I will enthusiastically encourage Israel to do the same."
In addition to the missile launch, reports in Iran have suggested that the country is mulling blocking the Strait of Hormuz, a key artery for global oil and gas supplies being sent around the world from the Middle East. However, despite the warning, oil prices plunged as a further escalation of the conflict between the U.S. and Iran appears contained.
Some analysts have argued that although tensions in the Middle East have now intensified, the strikes have removed at least one shroud of uncertainty around whether Trump would move to strike Iran.
"With the overhang of uncertainty lifted somewhat, the weekend events could wind up being a net positive," analysts at Vital Knowledge said in a note to clients.
Fed’s Bowman backs July rate cut
Fed Governor Michelle Bowman has stated that she would support an interest rate reduction at the central bank’s next policy meeting in July.
Speaking in Prague, Bowman predicted that Trump’s sweeping tariff agenda would have only a temporary effect on inflationary pressures in the United States.
Bowman added that, should price gains continue to be contained as they have in recent months, she would "support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting."
Several Fed officials are set to speak in the coming days, most notably Chair Jerome Powell, who will deliver two days of testimony before Congress starting on Tuesday.
Powell said last week that the central bank remained unconvinced of the case for more near-term interest rate cuts, as Trump’s duties continued to cloud over the wider economic outlook.
Oil falls sharply
Despite concerns that turmoil in the Middle East would continue to drive oil prices higher, especially given Iran’s saber-rattling related to the Strait of Hormuz, crude oil traded sharply lower today.
Brent crude futures for August had fallen 7.5% to $69.82 per barrel by 4 PM ET on Monday, and West Texas Intermediate crude futures had slipped by 8.1% to $67.88 a barrel. Both contracts erased large overnight gains.
President Trump urged countries and companies to keep oil prices low. "Everyone, keep oil prices down, I’m watching! You’re playing into the hands of the enemy, don’t do it," Trump wrote in all capital letters on his Truth Social platform.
In a follow-up post directed at the U.S. Department of Energy, Trump urged, "drill, baby, drill" and added, "I mean now."
(Ambar Warrick and Scott Kanowsky contributed reporting.)