US stocks opened sharply higher, with the Dow Jones up 1.8%, the S&P 500 gaining 1.7% and the Nasdaq rising 2.0% in early trade.
Gains were led by travel and tech names, with Norwegian Cruise Line up 6.4%, Carnival gaining 6.0% and Royal Caribbean rising 5.1%, while Palantir climbed 5.3% and Ciena added 5.4%.
A newswire report suggested Palantir’s Maven system has been designated a “program of record” by the US Department of Defense, marking a shift from earlier pilot programs and short-term contracts to a standardized capability expected to be deployed across the US armed forces.
Wall Street stocks are expected to start the week sharply higher after President Donald Trump claimed the US and Iran had held productive talks toward ending the conflict in the Middle East, even as Tehran flatly denied any contact had taken place.
Dow Jones futures were up 1.6%, S&P 500 futures gained 1.5% and Nasdaq futures 1.45%, reversing out of the red into the green after Trump’s posted on Truth Social that he had instructed the Department of War to “postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions”.
Trump said the discussions, which he described as “in depth, detailed, and constructive,” would continue throughout the week.
Iran’s Fars news agency quoted an unnamed official source saying there had been “no direct or indirect contact” with the US.
The source said Trump “backed down” after hearing Iran would target power plants in “West Asia”.
Reports from Axios suggested diplomatic backchannels were active between the US and Iran, with Turkey, Egypt and Pakistan helping pass messages.
Trump told Fox News that he believed a deal could come “in five days or sooner” following talks held “last night” with senior counterparts, offering tentative signs of potential de-escalation.
WTI crude oil prices fell to under $90 a barrel, having topped $101 early on Monday trading before plunging after Trump’s post.
This prompted scepticism from analysts who revived the TACO acronym – Trump Always Chickens Out – suggesting the president moved to de-escalate after seeing markets in freefall.
“It’s incredibly difficult to trade these markets when Trump is swinging between massive escalation and declaring peace/victory,” said Neil Wilson at Saxo, “but the market is happy for now that we do not enter a new phase of danger.”
Daniela Hathorn at Capital.com said the latest market moves “perfectly capture just how fragile and headline-driven this environment has become”.
The swift denial from Iran, she added, “underscores the core issue: markets are trading narrative, not certainty.
“The initial move reflects positioning with investors heavily hedged for escalation quickly pivoted toward relief, triggering a violent unwind. But the fact that the move was partially reversed highlights how little conviction there is in any single outcome. This is not a market that believes a resolution is imminent; it is a market reacting to any sign of an off-ramp, however fragile.”
Gold prices pared earlier losses as the dollar weakened against major currencies, after the DXY index rose above 100 before the Trump post.
Bond markets also whipsawed violently, with the US 10-year Treasury yield having climbed to above 4.42%, the highest since last July, before dropping to 4.358%.