Stock Market Surges Despite War as Wall Street Expects De-Escalation

Published: June 16, 2025 by Omor IE

Key Points

Stocks are surging today due to the Iran-Israel conflict not yet escalating out of control.
There has also been an article that claims Iran has approached Arab countries to mediate.
It apparently is open to more negotiation if the U.S. does not join Israel in its strikes.
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The stock market has been rallying today, despite there being yet another conflict in the Middle East and the prospect of the Strait of Hormuz being closed. This is mainly due to Wall Street expecting a cooldown in the conflict, as many countries have come forward to mediate a deal.

Iran has signaled that it is ready to enter talks if the U.S. stays out. The Wall Street Journal published an exclusive piece titled “A Battered Iran Signals It Wants to De-Escalate Hostilities With Israel and Negotiate,” saying that Iran has told Arab officials that it is open to negotiation and passed messages to Israel saying that it is in the interest of both countries to keep the violence contained.

According to the same piece, Israeli Prime Minister Netanyahu “has shown no indication he is ready to stop.” But the market is still positive due to Iran’s willingness to negotiate. Iran’s President Pezeshkian posted on X, “We have never been and are not aggressors, but hand in hand, we stand strong against the brutal criminal.”

The worst-case scenario would have been Iranian missiles hitting the U.S. bases in the Middle East and a closure of the Strait of Hormuz. This seems to have been averted for now.

Here’s a market update as of 10:30 AM (ET) today.

The S&P 500 is up 69.91 points, or 1.17%.
The Nasdaq Composite is up 298.63 points, or 1.53%.
The Dow Jones Industrial Average is up 466.12 points, or 1.1%.

Iran-Israel Conflict Dominates Headlines

Investors are currently pricing in a positive ending to this conflict, and they see both sides being more limited in their approach. Israel does not seem to be targeting Iran’s oil facilities en masse. This is bullish for the market since Iran could hit oil facilities elsewhere in the region and close the Strait of Hormuz in retribution. This could still happen, but it seems unlikely at the moment.

In the meantime, Iran has been firing many waves of ballistic missiles and drones at Israeli targets, whereas Israel has also been hitting targets inside Iran. The U.S. has moved dozens of tankers to Europe and has many more in the Middle East already, which is likely to give the U.S. more flexibility if it does choose to join Israel.

A G7 meeting is also taking place, and many expect new tariff and trade developments soon. The U.K. Prime Minister Starmer said that “…there is a consensus on de-escalation at the G7.”

Macros

NY Fed Manufacturing data came in at -16 vs. the -6 forecast.
OPEC keeps the 2025 global growth for oil demand stable at 1.29 million b/d.

Other Assets

Crude Oil Futures have declined 4.4% to $68.1. This is mainly due to investor optimism about the Iran-Israel war.
Natural Gas Futures are up 1.45% to $3.63.
Gold Futures declined 1.1% to $3,414.
Bitcoin is up 1.9% to $107,692.