The U.S. stock market rose on Monday because oil prices dropped significantly which brought back investor confidence after the recent Israel-Iran geopolitical conflict. The decrease in crude prices brought back market risk appetite before the Federal Reserve meeting this week.
The S&P 500 index rose after its Friday decline exceeding 1% because investors worried about Middle East tensions disrupting oil supply and fueling inflation. The price of Brent and WTI crude oil decreased by more than 3% on Monday because it became evident that weekend strikes did not affect oil production or shipping routes.
The market experienced reduced anxiety because Iran announced its plan to reduce tensions and restart nuclear talks with both the United States and Israel. The recent developments indicate that global energy supplies will not face significant near-term disruptions according to analysts.
The market has returned to its normal state after the unexpected events from Friday according to David Miller who serves as chief investment officer at Catalyst Funds. The current situation indicates that the conflict does not affect oil infrastructure operations.
The market attention shifts to the upcoming Federal Reserve policy decision. The central bank will not change interest rates but investors will analyze new projections to determine its inflation expectations and rate-cut schedule.
