Wall Street Rallies on an Iran Truce Ukraine Never Joined

U.S. stock futures jumped Monday and oil prices sank nearly 5% after the United States and Iran paused their bombing campaign over the weekend. Dow Jones Industrial Average futures rose 408 points, or 0.78%. S&P 500 futures gained 0.87%, and Nasdaq 100 futures climbed 1.46%.

The truce covers only Washington and Tehran. Ukraine struck an Iranian vessel carrying military cargo to Russia in the Caspian Sea that same weekend, killing a sailor and drawing a warning from Iran’s foreign minister that the attack “cannot go unanswered.” Markets are betting the calm holds through a week already loaded with risk: earnings from four of Wall Street’s most valuable companies, and the first live interest rate call from Federal Reserve Chair Kevin Warsh.

A Truce That Never Included Ukraine

Ukrainian forces hit the vessel on Saturday in the Caspian Sea, a body of water far from the missile exchanges that have dominated the Iran war for nearly two weeks. Iran said the ship was carrying drone and missile components bound for Russia. Ukraine’s ambassador to Israel, Yevgen Korniychuk, said the cargo backed up that account.

Iran’s government did not treat the strike as a footnote. Foreign Minister Abbas Araghchi said the attack could not go unpunished. Tehran summoned Ukraine’s chargé d’affaires to lodge a formal protest, calling it a “hostile and criminal act.”

We also achieved very strong results with long‑range strikes in the Caspian Sea, including vessels used in military cargo shipments involving Iran, as well as a warship.

Ukrainian President Volodymyr Zelenskyy detailed strikes on Russian and Iranian targets in a post on X Saturday, folding the Caspian operation into Kyiv’s broader campaign against Russian supply lines. That framing does not matter much in Tehran. A ship was hit, a sailor died, and the country that did the hitting is not a party to the pause that sent oil tumbling and futures higher.

Why Washington Blinked First

U.S. military officials told the White House late last week that continued strikes on Iranian targets were straining stockpiles of Patriot interceptors and other defensive munitions. Vice President JD Vance and Gen. Dan Caine, chairman of the Joint Chiefs of Staff, raised concerns about how far the campaign could run, according to CNN, before Washington held off on strikes for the first time in nearly two weeks.

Part of the deal now being negotiated centers on Iran’s chokehold on the Hormuz shipping lane, with Tehran said to be offering looser restrictions on vessel transit through the strait in exchange for the pause holding, according to a regional official involved in the talks.

The conflict has already cost American lives. An earlier Iranian strike that killed two U.S. troops rattled futures during the war’s first weeks, well before Saturday’s Caspian Sea incident added a third combatant to the picture.

Monday’s Market Board

Oil led Monday’s moves, and everything else followed. The declines rippled through currencies, bonds and precious metals well before the New York open.

Those moves happened hours before the U.S. open, which means Monday’s rally was already priced in by the time New York trading began, an unusually clean read-through from one commodity to nearly every other asset class.

A Conflict Wall Street Has Priced Before

This war has moved markets before. Pump prices topped $4 a gallon earlier in the conflict before easing as the fighting cooled, only to threaten another climb each time hostilities resumed.

The difference this time is the added party. Earlier pauses broke down over U.S. and Iranian actions alone. This one has to hold despite a third country with its own war to fight, and its own reasons to keep hitting Iranian ships tied to Russia’s military supply chain.

Warsh Faces His First Live Rate Call

The Federal Reserve meets Wednesday, and the consensus on Wall Street is that policymakers hold off on any rate hike until September. The CME FedWatch Tool shows traders pricing in a real chance the Fed moves a quarter point as soon as this week, a possibility that would have seemed remote before oil spent two weeks climbing.

It would be the first rate decision run by Kevin Warsh, whom the Senate confirmed as Fed chair by a 54 to 45 vote in May, the closest confirmation for the role in the modern era. President Trump sent Warsh’s nomination to the Senate in March, and the Federal Open Market Committee later unanimously elected him chairman. Warsh served as a Fed governor before, starting in 2006 at age 35, sitting alongside then-Chair Ben Bernanke through the 2008 financial crisis.

BMO Capital Markets said in a note late Friday that it still expects the Fed to hold rates steady, arguing softer June inflation data gives policymakers room to wait until September. But the firm acknowledged markets are debating renewed hike risk under Warsh. Treasury yields told a mixed story Monday: the 10-year fell 5 basis points even as it stayed near the top of its recent range.

Chipmakers Are Already Pricing in the Boom

While Wall Street waits on megacap earnings to gauge AI spending, China’s chip market delivered its own verdict Monday. Shares of Changxin Memory Technologies, known as CXMT, opened around 470% above their offer price on Shanghai’s STAR Market, then climbed as high as 531% by the midday break. The move made CXMT the most valuable company listed on mainland Chinese exchanges.

The DRAM maker raised 57.92 billion yuan, or $8.6 billion, in the offering, Asia’s largest IPO so far this year and mainland China’s second-largest ever, trailing only Agricultural Bank of China’s 2010 listing. Initial plans pegged the deal at $4.3 billion, roughly half of what CXMT ultimately raised once demand became clear. Shares priced at 8.66 yuan each, and most of the proceeds are earmarked for production-line upgrades and DRAM research.

South Korea delivered a smaller but related signal. Naver shares jumped more than 12% after the internet giant said it would issue 1.48 trillion won, or $1 billion, in new shares to Nvidia, part of a partnership with Nvidia and Brookfield to build out South Korea’s national AI computing infrastructure.

Which Earnings Could Swing the Week Most?

Microsoft, Meta Platforms, Apple and Amazon report this week, together representing trillions of dollars in market value and the bulk of the spending behind the AI buildout. Their results will show whether that spending keeps climbing or starts to slow, a question that already knocked Alphabet’s stock after its results disappointed investors last week.

• Microsoft reports first, offering the clearest early read on Azure cloud demand and capital spending guidance.
• Meta Platforms faces questions on whether its AI infrastructure spending is translating into advertising revenue growth.
• Apple is less exposed to AI capital spending than the other three, giving investors a contrast point.
• Amazon reports last, with AWS margins the focus after rivals already posted their cloud results.

“The biggest risk is the continuation of the spend,” said Ken Mahoney, chief executive of Mahoney Asset Management. “And then the problem is, if they do listen to shareholders and wind down a little bit of that spend, or reduce the growth of that spend, then the rest of the market is not going to like it.”

Mahoney called it a “seesaw factor” hanging over the earnings. Semiconductor stocks, the direct beneficiaries of AI capital spending, are especially exposed to whichever way the four companies lean.

Warsh delivers his rate decision Wednesday, ahead of the bulk of this week’s earnings. Tehran has not yet said whether, or how, it plans to answer Ukraine’s strike in the Caspian Sea.