Stocks Are at All-Time Highs — Can the Rally Last With U.S.-Iran Strikes Still Going On?

TLDR

• The Nasdaq surged over 8% in May, its best two-month stretch since 2002, with tech stocks leading the rally.
• The Dow, S&P 500, and Nasdaq all hit record closing highs to end last week, with futures pointing higher Monday.
• U.S. warplanes struck Iranian radar and drone sites over the weekend; Iran said it retaliated.
• Oil prices jumped Monday, with Brent crude rising above $93 and WTI climbing to over $90 a barrel.
• Investors are watching Friday’s nonfarm payrolls report for clues on the labor market and Fed rate path.

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Wall Street is heading into June on the back of a strong month, with all three major indexes closing May at record highs. Tech stocks drove most of the gains, and futures pointed higher again on Monday morning.

Dow futures were up 0.1%, S&P 500 futures climbed 0.3%, and Nasdaq 100 futures gained 0.6% in early Monday trading. That follows a May in which the Nasdaq Composite rose more than 8%, the S&P 500 gained roughly 5%, and the Dow added nearly 3%.

E-Mini S&P 500 Jun 26 (ES=F)

The Nasdaq’s performance over April and May represents its best two-month stretch since late 2002. Strong earnings reports from tech companies, particularly AI chipmakers, have been the main engine behind the move.

Despite the stock market strength, global tensions remain elevated. Over the weekend, U.S. warplanes struck Iranian radar sites and drone facilities. Iran’s Islamic Revolutionary Guard Corps said it had retaliated, continuing a cycle of military exchanges that has been running for weeks.

Oil Prices Jump on Fresh Strikes

Oil markets responded to the renewed hostilities on Monday. Brent crude futures climbed 3.1% to nearly $94 a barrel, and West Texas Intermediate rose 3% to around $90. The moves came after WTI had logged its biggest monthly drop since April 2025, falling close to 17% in May.

President Trump said he would convene advisers to make a “final determination” on next steps with Iran. He also called for the reopening of the Strait of Hormuz, a key shipping lane for global oil supplies.

Analysts are watching the situation closely. Deutsche Bank analyst Jim Reid noted the conflict has been ongoing for 54 days since a ceasefire attempt began. He said markets have never felt closer to a deal, but also never felt closer to it falling apart.

The dollar edged up 0.1% against a basket of currencies as investors moved into safer assets. The yield on the 10-year Treasury note ticked up slightly to 4.47%.

Jobs Report in Focus

The U.S.-Iran situation is not the only thing on investors’ radar this week.

Friday’s nonfarm payrolls report is the key data release to watch. The jobs numbers will give a clearer picture of how the labor market is holding up and could influence expectations for Federal Reserve interest rate decisions later in the year.

Bitcoin dipped Monday, with analysts pointing to reduced risk appetite tied to the U.S.-Iran flare-up as a factor.

The Nikkei in Japan rose to a record level Monday, led by tech stocks, mirroring gains seen on Wall Street.

With earnings season largely behind it, the market’s next direction may hinge on whether U.S.-Iran peace talks can progress or whether military exchanges continue to disrupt investor confidence.

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