Dow surges 400 points, oil falls as Iran reportedly seeks Israel truce

Stocks rallied on Monday on reports that Iran is seeking talk to end its war with Israel, easing fears that the conflict could spiral into a broader regional war.

The Dow Jones Industrial Average jumped 463 points, or 1.10%, to 42,660.98.

The S&P 500 climbed 1.15% to 6,045.65, while the Nasdaq rose 1.53% to 19,704.10. The Russell 2000 index of small-cap stocks added 1.44% to reach 2,130.66.

Volatility fell sharply, with the VIX index dropping 8.93% to 18.96.

Oil prices tumbled on hopes of de-escalation in the Middle East. US crude slid 3.66% to $70.31 a barrel, and Brent crude also fell 3.66% to $71.51.

Gasoline and diesel futures were also down, while natural gas bucked the trend, rising 2.49% to $3.67.

The market moves followed a report that Iran is signaling a willingness to step back from confrontation and resume nuclear talks.

According to the Wall Street Journal, Iranian officials have been urgently sending messages through Arab intermediaries to both Israel and the US, stating that Tehran is open to talks — provided the Americans don’t join the fighting.

“The Iranians know the US is supporting Israel in its defense, and they are sure the US is supporting Israel logistically,” one Arab official told the Journal.

“But they want guarantees the US won’t join the attacks.”

Despite heavy Israeli airstrikes that have decimated much of Iran’s air force leadership, analysts believe Tehran sees an opening for diplomacy.

Messages delivered to Israel reportedly emphasized that keeping the conflict contained is in both countries’ interests.

Iranian officials have also hinted that if negotiations resume, the nuclear program and broader military posture could be up for discussion again — though there is no sign they are ready to make new concessions.

Israeli Prime Minister Benjamin Netanyahu has vowed to continue military operations until Iran’s nuclear and ballistic missile capabilities are fully destroyed, rejecting any suggestion of a pause.

But the potential for US involvement — and mounting international pressure — has made markets hopeful that backchannel diplomacy could prevent a wider war.

President Trump, who has backed Israel’s right to strike, told reporters Sunday: “I think it’s time for a deal, and we’ll see what happens, but sometimes they have to fight it out.”

The possibility of a diplomatic opening has also encouraged Gulf nations like Saudi Arabia and Qatar to press the US to help broker a de-escalation, warning that a prolonged war could endanger key energy infrastructure in the region.

For now, investors appear to be betting that the worst-case scenario — an uncontrollable regional conflict that would roil oil markets and global growth — can still be avoided.