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HomeMarket NewsExplained — Three factors that aided Monday's Wall Street recovery
Jeff Kilburg, CEO of KKM Financial, had posted on Sunday night that the market would turn green before the close on Monday. He said that the futures market overreacted to the Iranian conflict, creating an opportunity to buy the S&P 500 as it neared its 2026 low. "We remain in a bull market despite escalating geopolitical tensions," he said.
Benchmark indices on Wall Street largely shrugged off the escalating US-Iran war in the Middle East on Monday, ending significantly off the highs of the day, as investors chose to buy the initial dip after Friday's sharp sell-off.
The Dow Jones ended with cuts of just 70 points. At the lows of the day, the index was down over 600 points. The S&P 500 closed at the flat line, while the Nasdaq ended the session with gains of 0.4%.
Three factors were the key contributors to the recovery seen on Monday:
First, oil prices cooled off slightly from the highs of the session. From over $80 per barrel in the initial ticks, Brent settled at around $77, fueling some optimism, along with the hope that prices will eventually cool off when the conflict is over.
Second, tech stocks led the outperformance with buying emerging in sector leaders such as Nvidia and Microsoft, which contributed to the gains in the Nasdaq. These tech companies, also cash rich, could act as defensive plays due to their ability to withstand the impact of the war.
Lastly, the historical evidence of such geopolitical events presenting buying opportunities more often than not and moving on once the events are past.
Only four out of the 11 S&P 500 sectors were in the green, but the important ones, energy, tech, real estate and industrials, which ensured the index closed at the flat line.
Jeff Kilburg, CEO of KKM Financial, had posted on Sunday night that the market would turn green before the close on Monday. He said that the futures market overreacted to the Iranian conflict, creating an opportunity to buy the S&P 500 as it neared its 2026 low. "We remain in a bull market despite escalating geopolitical tensions," he said.
Buying was also seen in defence names on expected lines, with Northrop Grumman rising 6%, while Lockheed Martin posted a 3% advance. Buying was also seen in stocks like ExxonMobil and Chevron.
Data from Wells Fargo shows that the S&P 500 turns positive within two weeks of a major conflict and is higher by 1% on average, three months later.
