Oil prices plunge more than 3% on Middle East optimism…US stock market rebounds sharply

Oil price plunge triggers global inflation concerns

Tech stocks such as NVIDIA, Tesla, Palantir, and Meta rise

Optimism that the armed conflict between Israel and Iran will be limited spread, leading the US stock market to rebound on the 16th (local time). International oil and gold prices, which soared immediately after Israel's attack on Iran last week, have fallen.

At 10 a.m. Eastern Standard Time, the S&P 500 index rose 1%, the NASDAQ composite increased 1.3%, and the Dow Jones Industrial Average climbed 1% as well.

US West Texas Intermediate (WTI) crude fell 3.9% to $70.10, nearing a return to the $60 range. Benchmark Brent crude is also down 3.5%, trading at $71.68. Spot gold fell 0.5% to $3,415.86 per ounce.

As oil price gains narrowed and inflation concerns eased, the yield on the 10-year US Treasury note, which had risen by as much as 6 basis points (1bp = 0.01%) during the day, settled at 4.43%, reducing its increase to 3 basis points.

Tesla gained 1%. NVIDIA rose 1.9% on high expectations for its sovereign AI plans, and Meta Platforms, which has made a series of announcements about AI lately, gained 3%. Palantir, considered a beneficiary of geopolitical tensions, also climbed 3% on the day.

U.S. Steel advanced 5.1% after President Trump officially approved Nippon Steel's acquisition of U.S. Steel over the weekend.

Since Israel's attack on Iran last Friday, the market has closely watched developments in the Middle East. In the early stages of the airstrikes, concerns about the potential closure of the Strait of Hormuz drove a spike in oil prices and a slump in stocks, but the consensus now is that any conflict will remain limited in scope.

Krishna Guha, Vice Chairman of Evercore ISI, noted in a report, "The market feels relieved by the outlook that the conflict will remain a limited war."

Investors also maintained a positive mood in response to June manufacturing activity data from New York State released ahead of the Federal Reserve Board's rate decision this Wednesday.

According to the CME Group's FedWatch tool, federal funds futures are pricing in nearly a 100% chance that the Fed will keep rates on hold despite pressure from President Trump. The prospect of a rise in oil prices due to Middle East conflict is also likely to further diminish expectations for a Fed rate cut.

Byung-una Guest Reporter kja@hankyung.com