US stocks rise despite Iran war as traders shrug off oil surge and geopolitical risks

The US stock market kept climbing on Tuesday, even as the war story around Iran stayed right in front of traders. The S&P 500 rose 0.6%. The Nasdaq Composite gained nearly 0.7%. The Dow Jones Industrial Average added about 250 points, or 0.5%.

Meanwhile, oil prices were up about 2%, with Brent crude back above $100 a barrel as of press time, according to data from TradingView.

Traders keep buying stocks even as the US-Israel war in Iran and oil prices stay in focus

On Monday, the S&P 500 rallied by 1%, the Nasdaq Composite rose by 1.2%, and the Dow ended the day up more than 300 points, or 0.8%.

Part of that jump came after oil pulled back. Treasury Secretary Scott Bessent claimed that the U.S. is letting Iranian oil tankers move through the Strait of Hormuz, which is, of course, a lie, but did give the stock market room to breathe.

Still, not everyone liked how relaxed the traders looked. Tony Pasquariello, Goldman Sachs’ global head of hedge fund coverage, warned clients that the stock market might be taking the U.S.-Iran risk too lightly.

Tony wrote that: “I worry the stock market is underestimating the potential downside tails. The market is certainly smarter than I am, but I’m surprised that market participants aren’t more concerned.”

There were also signs that the shipping plan was not fully ready. Reports said an escort coalition was coming together in the Middle East, but Donald Trump said Monday that the group was still not complete.

He told reporters, “We have some [countries] that are really enthusiastic. They’re coming already. They’ve already started to get there.” He then added, “We’ll give you a list. Some are very enthusiastic, and some are less than enthusiastic, and I assume some will not do it.” That left room for doubt, and doubt matters when so much of this stock story is tied to shipping lanes and oil flow.

But just moments ago, Trump posted on Truth that:-

“The United States has been informed by most of our NATO “Allies” that they don’t want to get involved with our Military Operation against the Terrorist Regime of Iran, in the Middle East, this, despite the fact that almost every Country strongly agreed with what we are doing, and that Iran cannot, in any way, shape, or form, be allowed to have a Nuclear Weapon. I am not surprised by their action.”

Charts show oversold stock conditions, while volume and momentum stay weak

The rise in stock prices has not come with strong trading volume. That is one reason some traders are not fully sold on the bounce. On Monday, the SPDR S&P 500 ETF, or SPY, traded 71.3 million shares. Its 30-day average volume is 88.5 million.

The Invesco QQQ Trust, which tracks the Nasdaq-100, traded 44.4 million shares. Its 30-day average is 71.5 million. So the rally happened, but the traffic behind it was light.

There is also a split inside the charts. The S&P 500 is still holding above its 200-day moving average, which is an important level for traders watching the bigger trend.

But Rob Ginsberg of Wolfe Research said one group needs to recover before this rally can really mean more. That group is financials. The S&P 500 financials sector is down 4% this month, and Rob called it “deeply oversold.”

He wrote, “We’ve been laser-focused on their troubling performance for quite some time, and if the market is going to make a powerful stand at its 200-day, this needs to be the one to show us the way.”

For the Dow, short-term oversold conditions are in place for the first time since November. A new signal from the DeMARK Indicators points to a rebound this week.

But the 50-day moving average near 49,000 is the first resistance level, and a bounce that big does not look likely before the correction takes hold again.

The pullback has already come with the kind of intermediate-term momentum loss not seen since the first quarter of 2025.

A bearish crossover in weekly MACD suggests any rebound may be brief, then give way to a drop below the 200-day moving average. Former highs near 45,000 are the next support area, backed by the weekly cloud model.

The correction may also keep following an A-B-C pattern, which points to another leg lower after a rebound. A more important low may still be at least a few weeks away.

Even so, the ratio of the Dow to the S&P 500 is now short-term oversold inside what looks like a rounded base, which suggests the Dow may fall less than the S&P 500 through the rest of this correction.

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